PL Global Impex

Relation between Gold and Currency and why is Agro a safer bet

We all know that there is an interrelation between Gold and Currency. It is the gold reserves on the basis of which currency is printed. Rate of gold in a country affects the strength of a country’s currency. Mostly, in all parts of the world the fiat currency depends on gold. Gold is a traditional and the oldest form of exchange, its history is older from that of the currency. From the medieval era gold was an exchange commodity.

Apart from the other metals, it has a high intrinsic value, that is the reason most people use it as a hedge against inflation. Though this value can fluctuate many times. In fact, gold meets all the conditions of money, that is durability, consistency and divisibility as suggested by experts. Gold standard is used by most of the developed and developing countries.

It is a method to measure the value of one’s currency with the value of gold’s value. Whereas domestic gold deposits or its exports increase the value of currency. It’s import can weaken the currency. More import of gold increases the inflation of a country. Gold import as said before can cause expansion, acquisition of gold by financial backers is an answer for fence expansion. Financial backers like to purchase gold at the hour of expansion. there is an expansion in its interest during expansion despite the fact that the stockpile stays restricted.

Thus, people with more gold have a better chance to protect themselves against inflation and a weak home currency. The value of gold can plunge if there is a turmoil in the country, or another crisis when the government falls. Although the value increases when the situation is calm.

Is Agro a safer bet ?

Agriculture sector in recent times has proved that it is the ultimate savior. When the country was reeling through economic fluctuations caused due to the pandemic and lockdown, The agricultural sector was the one which was registering a positive growth rate. Also, it was also providing jobs to the needy daily wage laborer under the MGNREGA scheme. So, when a sector performs well their stocks also do the same.

During the lockdown and also this year the agro stocks performed very well, they gave a solid return. Although it dwindled sometime, the long term investors associated with them will definitely acknowledge that they are the long race horse. Innovation is also coming in the agri-sector through IT interventions and new types of products. Things are getting easy day-by-day. There has also been a call by the government and innovators to look at the growth prospects of this sector.

It is true that India initially was an agri-based economy, though the sector has also witnessed drastic times. But after the Green Revolution in the late 1970’s and early 1980’s the sector has got a head start towards positive growth. The government and the policymakers should pay attention to the needs of this sector, they should check all the nuances and faults in the current policy. This will make the agro sector a safer bet. Also for more relevant information, P.L Global Impex Pte. Ltd.

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