KOCHI: Gold’s rising value represents a modern irony – Right?
Gold’s continued rise is not driven by its use but by its uselessness – or rather, by the belief that its value lies beyond the manipulations of modern finance. Gold pays no dividend, yields no interest, and serves no industrial necessity of scale. Yet it prospers precisely because of that detachment.
In an era when even currencies are virtual and wealth is a digital illusion, gold’s tangibility has become its greatest psychological weapon. It is, ironically, the most perceived asset of all – a store of value that survives not because of logic, but because of faith.
The twist
The real paradox of gold, then, is that it thrives in an age that no longer needs it. Gold has become a mirror reflecting our collective mistrust in the systems we built – of money, markets, and even progress itself.
Gold today is not a metal; it’s a message. A reminder that in the theatre of global economics, perception can still outshine purpose.
Despite losing its original legs, gold’s rising valuation defies all conventional reasoning. Once treasured for what it was – rare, ornamental, and beautiful – gold today commands its worth for what it represents: safety, stability, and escape from an unstable world.
This inversion, where perception outweighs purpose, is perhaps one of the greatest paradoxes of modern economics.
The fading original logic
For centuries, gold drew its value from tangible and cultural roots. It was rare, enduring, and stunning to behold. Civilizations wore it as a symbol of prosperity; nations stored it as a measure of wealth. In India, it flowed through generations as an heirloom, a wedding essential, a mark of status.
But the world has changed. The younger generation, even in gold-obsessed markets like India, is no longer captivated by its lustre. Style has become transient, technology-driven, and lighter.
The demand for physical jewellery has steadily declined as tastes shift to minimalist designs or alternative investments. In an economy where liquidity, digital wealth, and financial flexibility matter more than adornment, gold’s original reasons for existence have faded.
Yet, paradoxically, its price hasn’t.
When logic loses and fear wins
What keeps gold’s allure alive in a world that no longer needs it as jewellery or currency? The answer lies not in economics but in psychology.
Gold has become the asset class of doubt – a mirror reflecting humanity’s fear of its own creations: volatile markets, uncertain politics, and fragile currencies. Every global tremor — be it a tariff war, a banking collapse, or a central bank pivot – pushes investors back towards the metal they once mined for beauty, now hoard for safety.
New drivers: From tariffs to trust deficit
Trump’s tariffs and trade turbulence: Renewed protectionist rhetoric in the US has rekindled fears of a global slowdown. Tariff wars weaken trade flows, inflate costs, and threaten corporate profits – each a spark that makes gold glitter brighter.
The dollar dilemma: Once the unquestioned pillar of global finance, the US dollar faces its own credibility test. With talk of de-dollarisation gaining traction and alternative trade settlements emerging, gold finds itself as the neutral refuge in a fracturing monetary order.
Interest rate expectations: Gold thrives when real interest rates fall. The more investors expect central banks to ease policy, the lower the opportunity cost of holding a non-yielding asset like gold.
Geopolitical uncertainty: Wars in West Asia and Eastern Europe, unpredictable elections, and widening ideological divides all feed into a premium for stability – a premium gold still commands.
Eroding confidence in economies: From slowing growth in China to fiscal anxieties in advanced economies, the world’s economic architecture looks less certain. In that uncertainty, gold finds its relevance reborn.
