Article;
Will Inflation Linked Bonds Be Able To Reduce Demand For Gold
Comment;
It as far as
competition with gold is concerned the linkers would be giving less than CPI.
The gold is giving CPI plus real interest rate and linkers are bonded with WPI.
Do we see any difference… I mean, CPI is 9.90 and WPI is 4.5. If gold prices
rise in comparison to CPI and giving better than it, why the public would
invest in an asset giving less than gold? In the US and UK returns are indexed
according to CPI therefore they are popular. But again inflation in comparison
to in these countries is much higher but the absolute interest rates are almost
same 2-3 percent. Unless the bonds are linked with CPI it will be of less use
from the point of view of a long term investment. In the long run we do not
assume inflation therefore we need to be protected against inflation and
erosion of wealth…
No comments:
Post a Comment