Mark Mobius Bullish On Gold Despite Slip In Price, Saurabh Mukherjea Says Bet On Equities Instead
Mark Mobius forecasts strong gold demand, driven by global uncertainty and rising Indian incomes, but Saurabh Mukherjea advises against buying gold due to its volatility and lower returns.
After a historic bull run over the past year, gold is under renewed focus following the US election results, as the metal shed some of its glitter in the face of strengthening US dollar and bond yields. Despite the recent slip in prices, ace investor Mark Mobius is bullish on the precious metal.
"My view on gold is still bullish. I believe you should have gold—at least 10% of your portfolio, or maybe even more," Mobius said, while speaking to NDTV Profit on Thursday.
The remarks came in the backdrop of gold price plunging by $100 within a span of two days, as it slipped from a high of $2,750.01 on Tuesday to a low of $2,643.47 an ounce on Thursday.
"I think the demand for gold will still be there. Of course, there will be fluctuations, as gold weakens when the dollar gets strong. But I think we are now in a situation where there could still be some strength coming into the US dollar, but not much more," said the 88-year-old, who is the founder of Mobius Capital Partners LLP.
Fund manager Saurabh Mukherjea told NDTV Profit in another discussion that he would not recommend buying gold considering the "lower returns and higher volatility".
Instead, investors in India and the US should bet on equities, said Mukherjea, who is the founder and chief investment officer of Marcellus Investment Managers Pvt.
Mukherjea said 65% of the world's stock market wealth comes from these two markets of India and the US. "You got two markets that perform really well...low correlation and diversification giving you safety. Why, on earth, do you want to buy gold then? You get lower returns and high volatility on gold. Why people buy is beyond me," he said.
'Indians Love Gold'
According to Mobius, India is one of the factors that keeps him bullish on gold. "Indians love gold. They believe in gold for safe keeping. As per-capita income rises in India, the demand for gold will also keep rising," he said.
The second reason that he recommends investing in gold, said Mobius, is because the metal will remain in demand due to the buying spree among central banks.
"Central banks across the globe are increasing their gold holdings, despite saying that their currency is not backed by gold. The reason behind the increased buying is that they worry about the global environment, including factors such as the value of dollar, and what Trump would do or not do after taking charge as the US president," he said.
Notably, the slump in gold price in the global market, following Trump's decisive win in the US, had also led to a sharp decline in Indian gold futures on the Multi Commodity Exchange. The December contracts slipped from a high of Rs 79,181 per 10 grams on Tuesday to a low of Rs 76,340 per 10 grams.
Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
