Some attributed it to the deteriorating global environment, while others cited the conflicts in the Middle East and Ukraine.
After touching Rs 73,958 on MCX, the price of gold is now around Rs 70,725. There has been a significant surge in gold prices since March (₹63,563). Initially, the reason behind this rapid increase was not clear to people. Some attributed it to the deteriorating global environment, while others cited the conflicts in the Middle East and Ukraine. However, the truth is that the TINA Factor (There Is No Alternative) has led to such a shine in gold prices.
So, who is TINA and how are people rushing to buy gold because of TINA?
Firstly, TINA does not have much impact on people in India. The people of neighboring country China have been deeply influenced by the TINA factor. A report came a few days ago stating that China will become the largest consumer of gold in 2023. The Chinese bought a total of 630 tons of gold, while Indians bought 562.3 tons.
What is the TINA Factor?
TINA stands for There Is No Alternative. Essentially, people fearful of possible uncertainties in the future consider investing in the safest investment instrument, gold, as the best option. People feel that there is simply no other alternative. This has forced retail shopkeepers, investors, futures traders, and central banks in China to buy gold. As a result, the price of gold continues to rise.
For the first time, there has been such a huge demand for the purchase of gold jewelry, bars, and coins in China. The demand for gold jewelry in Beijing has increased by up to 10%, while in India, this demand has decreased by up to 6%. Talking about investments in bars and coins in China, it has increased by up to 28%.
A report from Bloomberg highlights an important point based on Philip Klapwijk, Managing Director of Precious Metals Insights Limited in Hong Kong. He hinted that in the coming times, these prices could rise even further. He said, "Demand and expectations of growth are visible."
It should be noted that in recent years, the property sector in China has been sluggish, the stock market has been quite volatile, but no good movement has been seen, and China's currency, the yuan, has also weakened against the dollar. All these factors have turned investors' attention towards gold. After seeing everything, they understand only TINA, which means there is no (better) alternative.
Klapwijk also believes that currently, there are no other alternatives visible in China. Due to exchange and capital controls, you cannot think of putting money into any other market. However, although China exports more gold than any other country, there is still a need for more exports. In the last 2 years, 2,800 tons of gold have been purchased abroad, which is more than the total gold backing exchange-traded funds (ETFs) worldwide.
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