Amidst a world where trust in institutions wavers, Pakistanis are embracing the timeless haven of gold. In a country where economic uncertainty looms, the allure of gold as a safe-haven asset is undeniable.
"The conversion of rupees into gold is a straightforward process for those with illicit funds," explains Shabbar Zaidi, a former Federal Board of Revenue chairman. "There's no complex science to it."
Gold prices have been on a tumultuous journey, mirroring the ebb and flow of US-China trade negotiations. Despite this, the influx of funds into gold has accelerated, driven by a desire for stability in an uncertain world.
On October 20, international gold prices soared to a record $4,328 per ounce, while in Pakistan, the price climbed to Rs448,649 per tola, according to Forex.pk. However, as of the latest update, prices have dipped, with gold now trading at Rs424,197 per tola in Pakistan and $4,082 per ounce internationally.
Silver, too, has seen its share of fluctuations, with traders and jewelers cautioning against impulsive buying. Haji Muhammad Iqbal, a Lahore-based trader, highlights the challenge of understanding market swings, noting that many Pakistani buyers lack the seasoned investor mindset.
The allure of gold extends beyond its financial appeal. Its cultural significance and ease of purchase, without the need for identification or documentation, make it a popular choice. Gold's liquidity further enhances its appeal, allowing individuals to buy, store, and sell it as needed.
In Pakistan, gold trading occurs through various channels, including the Karachi Bullion Exchange and ARY Gold for investors and jewelers. Everyday buyers often purchase gold biscuits directly from jewelry shops. However, the Pakistan Mercantile Exchange (PMEX) offers a regulated platform for gold commodity trading, including the smaller denomination 'millitola' for everyday investors.
Despite its legal status, PMEX's reach is limited, and demand often surpasses supply. Buying through PMEX is more expensive due to regulation and taxation. Consequently, many Pakistanis opt for informal channels, such as social media platforms like WhatsApp, to engage in spot buying, although authorities have cracked down on such activities.
The demand for gold is influenced by various factors, including geopolitical tensions and the performance of the US-China relationship. As Trump's policies disrupt the economic and political landscape, gold prices fluctuate, impacting the fortunes of small investors in Pakistan. The cultural affinity for gold, coupled with its ease of purchase and liquidity, further fuels its popularity as a safe-haven asset.
