Emerging markets veteran bets on gold; here’s why yellow metal may shine for investors

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Updated: September 9, 2019 11:28:32 AM

U.S. gold futures were down 0.2% at ,557.8 an ounce.According to Mark Mobius, gold is set to gain as interest rates continue to fall globally.

Even as gold prices continue to trade near record levels, emerging markets veteran Mark Mobius feels that owning the yellow metal metal in physical form is the way to go for investors. Notably, gold prices recently hit a record high of Rs 39,885 for 10 grams last week. According to Mark Mobius, gold is set to gain as interest rates continue to fall globally. “Physical gold is the way to go, in my view, because of the incredible increase in money supply. All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there,” Mobius, the founding partner of Mobius Capital Partners said in an interview to CNBC. 

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Gold prices are trading higher on Monday, after falling nearly 1 per cent in the previous session, on expectations of monetary policy easing by the world’s major economies amid soft economic data, although an uptick in equities limited gains, according to Reuters. According to Mark Mobius, investors should hold 10% of their portfolios in physical gold, with the rest should be invested in dividend yielding equities. Mobius explained that the US administration led by Donald Trump does not want a strong dollar, and hence, the government is going to try to weaken the dollar against other currencies. “As soon as they do that, other currencies will also weaken. People are going to finally realize that you got to have gold, because all the currencies will be losing value,” he explained.

Despite the ongoing slowdown and tepid stock market back home, Mark Mobius says that it’s a good time to invest in India with a long-term horizon. However, his biggest concern is taxation in the country. In a recent interview to CNBC TV18, Mobius said there is heightened confusion with respect to taxation, after the Narendra Modi-led government announced a rollback of the recently introduced FPI surcharge tax. He further noted that rolling back surcharge levied on FPIs was a very good move.

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