The article “Let’s go back to good old gold” (Business Line, November 29) should be music to the ears of the World Gold Council. In an era where gold prices are expected to go down, the author’s recommendation for an increase in gold’s share in reserves management will reverse this trend. While I regard gold as an equivalent monetary asset in times of need, I would not like to go with the author in recommending a one-third reservation, as it will impact the monetary policy to a greater extent. Gold is a precious metal, preferred by households. The way the author has argued for gold, I am tempted to work out an approach for bringing real estate under reserves management. However, all assets cannot be brought under reserves management; only monetary assets can be included. Though gold is also a near-equivalent monetary asset, providing for a larger share may be counter-productive and will bring down the economic performance. Also, it will lead to greater focus on gold price movement too, which may not always be in the best interest of reserves management.
- Raghavan Guruswami (HBL)
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