Gold: Investors' heaven in 2022

January 01, 2022 (MLN): Despite economic and political melancholy which has disappointed every other citizen during the outgoing year, gold owners/investors enjoyed outstanding returns as the precious metal registered an exceptional gain of around 58,000 or 46% YoY per tola in 2022.

By the end of the year, the yellow metal reached Rs183,900 per tola compared to Rs126,000 per tola at the end of 2021.

The devaluation of local currency, shortage of dollars in the open market, and dwindling macros forced investors to park their money in precious metals. Thus, the demand for gold kept on surging in local bullion throughout the year.

Adding insult to injury, the speculative elements have also played their role to carve out the maximum advantage which led gold to break all its previous records, marking an all-time high of Rs192,000 of 24karat on December 21, 2022, in domestic bullion.

Speaking to MG Link News, Haroon Chand President of All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) confirmed that the speculators are taking advantage of the situation which took gold prices to exorbitant rates.

 Responding to a query pertaining to the outlook of gold, he said, “Given the uncertainty, the price of gold may cross Rs200,000 per tola in the bullion market.”

Surging economic uncertainty amid depleting foreign exchange reserves, continuous delay in foreign inflows and stalled talks with International Monetary Fund (IMF) have increased the attraction of gold for investors.

According to a report by Topline Securities, gold outshined all major investment avenues by a substantial margin in 2022 as yellow metal posted a gain of 41% YoY in the outgoing year.

In the local market, gold rallied in line with the increase in dollar rate in the black market. Currently, the yellow metal is valued at black market parity rather than the official rate which is 10% lower. Although in the international market Gold remain more or less stable in 2022.

Meanwhile, the holder of Naya Pakistan US$ Certificate under Roshan Digital Account (RDA) also made 36% in PKR terms due to falling PKR value. Similarly, holders of the cash dollar made a gain of 28% in 2022 as the official bank rate of the dollar rose from Rs177 at end of 2021 to Rs226, the report added.

It is important to mention that Pakistani bullion is a piece of cake for scammers since there is nothing like a regulated body there.

The yellow precious metal traded in the bullion market is completely unregistered as no legislation is available to be followed, Zahid Mansoor, Chief Business Officer at Pakistan Mercantile Exchange (PMEX) told MG Link News.

As a result, the national exchequer is losing over Rs200 billion as tax revenue which could be generated if the government registers domestic bullion under-documented economy.

In order to regulate the bullion market, the government should introduce a one-time amnesty scheme so that dealers/gold owners can fearlessly show their possessions to get themselves registered.

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