2026 India's Gold CRISIS Explained — Transcript

Full transcript

1. 0:00Okay, a lot is happening right now. Gold
2. 0:02in 2026 is up 13% and crude oil is up
3. 0:0677%.
4. 0:08Not only that, Sensex and Nifty is down
5. 0:1111% and now the Indian government is
6. 0:14asking us to
7. 0:25So, why is the Prime Minister saying all
8. 0:27of this? As you as an investor, amongst
9. 0:30all this news, what should you actually
10. 0:32do? In this video, we'll cover two
11. 0:34things. One, what should your actual
12. 0:37strategy be with respect to gold and
13. 0:39[music] equity? Second, what is that one
14. 0:42investment strategy that you can just
15. 0:44follow to keep everything simple and
16. 0:46save yourself from everything that's
17. 0:48happening right now. By the way, every
18. 0:51time the media hypes something and
19. 0:52scares you, 01 tries to release a video
20. 0:54to explain how you can decode the news
21. 0:58in simple terms. But, if you do not
22. 1:00subscribe, which a lot of you aren't,
23. 1:02you won't be able to decode the market.
24. 1:04So, can you please hit that subscribe
25. 1:05button, do yourself and us a favor.
26. 1:10So, I did not actually know this.
27. 1:14India produces about 1 to 1.5 tons of
28. 1:19gold a year that we produce right here
29. 1:22in India. Can you estimate how much do
30. 1:24we import in a single month? In January
31. 1:27alone, it was 99 tons. That's in a
32. 1:30single month. So, obviously, we spend a
33. 1:33lot of money importing gold. Virtually
34. 1:36all of our gold is imported and it's
35. 1:39imported not in rupees, but dollars.
36. 1:41World gold prices are priced in dollars,
37. 1:44which means when you want to buy these
38. 1:4599 tons, like we did in January, we
39. 1:48would pay dollars and the dollars come
40. 1:51from our forex reserve.
41. 1:52>> [music]
42. 1:52>> Now, India does not want to spend too
43. 1:54much on dollars because it costs us from
44. 1:57our Forex Reserve. Therefore, we have a
45. 1:59tariff on the gold which makes the gold
46. 2:02a little more expensive for India to
47. 2:03buy. It used to be 6% and now it's
48. 2:06changed to 15%
49. 2:08>> [music]
50. 2:08>> which means this increase discourages
51. 2:10buyers to actually buy gold. I will
52. 2:12explain why in just a bit. Indian gold
53. 2:15prices are very interesting because
54. 2:17there are two variables here. One is you
55. 2:19have the Indian gold prices which
56. 2:21already have the tariff in
57. 2:22>> [music]
58. 2:22>> and how it's correlating to global gold
59. 2:25prices. And then you have the rupee and
60. 2:27dollar relationship because as the rupee
61. 2:30weakens, the Indian gold in India
62. 2:32actually becomes more valuable. Look at
63. 2:35this relationship of Indian gold prices
64. 2:37along with USD INR. Very simple, you'll
65. 2:40notice domestic gold prices are going
66. 2:43up. Actually, that's quite a steep move
67. 2:45up. And then this purple line falling is
68. 2:47actually USD INR where the USD is
69. 2:49becoming stronger against the rupee. So,
70. 2:52imagine a situation that the prices have
71. 2:54not changed but the rupee continues to
72. 2:57depreciate. So, when a country uses the
73. 2:59Forex Reserves to buy a lot of just one
74. 3:01thing, it puts pressure on the economy.
75. 3:04And you know, gold is the third largest
76. 3:07thing we import. The first largest thing
77. 3:10The largest thing is no guesses here,
78. 3:13oil. So, I'll explain this oil bit so
79. 3:15that we can understand what to do
80. 3:17actually with our portfolio right now
81. 3:19today based on what the government is
82. 3:21also saying. Now, within oil, crude oil
83. 3:24is 88%. So, if India spent 100 rupees on
84. 3:28oil related imports, 84 rupees goes
85. 3:31towards crude oil imports. And crude oil
86. 3:34is like blood for the country. Actually,
87. 3:36any country, energy is how a country
88. 3:39runs. So, if the prices of oil are going
89. 3:42up and they've gone up a lot, it's
90. 3:44actually putting pressure on our
91. 3:46economy. Now, you're probably thinking
92. 3:49like I was thinking that India probably
93. 3:51has some reserve, right? Some emergency
94. 3:54fuel tank we can use because
95. 3:57we do. We actually have the strategic
96. 3:59petroleum reserves. And when I Google
97. 4:01this, I felt a lot better because there
98. 4:03we're supposed to maintain 90 days of
99. 4:07strategic petroleum reserves.
100. 4:11Then I found out our current city.
101. 4:15India has 60 days of crude oil, 60 days
102. 4:17of natural gas, and 45 days of LPG
103. 4:20stock.
104. 4:22Think about this for a moment. This
105. 4:23obviously means that we are now digging
106. 4:25into our strategic reserves, and that's
107. 4:27never a good thing because fuel price is
108. 4:31actually linked to the entire economy.
109. 4:33Let me give you an example.
110. 4:35Over here we can see when oil prices go
111. 4:37up, food prices often go up. The entire
112. 4:40value chain from production all the way
113. 4:42to delivery relies on energy, whether
114. 4:44it's transportation or actually growing
115. 4:46the crop. So, we can see here recently
116. 4:48headline inflation and food inflation.
117. 4:50We've recently hit 3.21% in February
118. 4:532026, which is a 10-month high. But
119. 4:57actually food inflation has gone up, but
120. 5:00not as much. Which means that we've yet
121. 5:03to see the impact of crude on food,
122. 5:05[music]
123. 5:06basically. Which means that if this is
124. 5:08continues, we will actually feel the
125. 5:10pinch.
126. 5:11Let's look at the forex reserves. So,
127. 5:14India earns dollars from forex exports.
128. 5:17For example, when we export software
129. 5:20abroad, we actually earn in dollars. But
130. 5:22when we import something, the opposite
131. 5:24happens. We spend in dollars. For
132. 5:27example, gold and oil. The difference
133. 5:30goes into the bank account that's
134. 5:31managed by the RBI, and that turns into
135. 5:34a foreign exchange reserve.
136. 5:36India has about 11 months of import
137. 5:39cover. So, the reserve is about 691
138. 5:42billion. That's in March 2026. But 1
139. 5:46month before that, in February, the
140. 5:48actual total was 730 billion dollars.
141. 5:51That was our reserve. What's really
142. 5:53happening is because the prices are
143. 5:54changing, we have to pay way more to get
144. 5:57a lot less. And that's not [music] good.
145. 6:00But, you know, this is not the first
146. 6:03time. In the past, India has seen rising
147. 6:05inflation, gold demand, rising oil. What
148. 6:08did we do then? Let's look at history
149. 6:10because it teaches us something really
150. 6:12interesting. In 1991, there was a forex
151. 6:15crisis where India had 1.2 billion
152. 6:18dollars worth of reserves. And this was
153. 6:20less than 3 weeks. So, when the time
154. 6:23came for us to actually use it, we used
155. 6:26gold. We took gold, pledged it, and
156. 6:29literally got help from the Bank of
157. 6:32Switzerland and the IMF. And that's how
158. 6:34the country ran. So, we do remember a
159. 6:36little bit of trauma, but we dealt with
160. 6:38it. We don't want to be in the 1991
161. 6:41situation. To be honest, we're nowhere
162. 6:43even close. But, why wait, right? When
163. 6:46we know that such a pressure comes to
164. 6:48the economy, we want to lessen the
165. 6:50impact as much as possible. Which is why
166. 6:52the government is asking us not to do
167. 6:54anything that puts pressure on those
168. 6:56forex reserves. A weaker forex does
169. 6:59three things. It increases inflation,
170. 7:02creates a whole mess for the economy
171. 7:04because the costs and profit all goes
172. 7:06for a toss, and you also see a weaker
173. 7:08currency, import costs, and general
174. 7:10volatility.
175. 7:11You see, when the market becomes
176. 7:13volatile, it will affect your portfolio.
177. 7:16And I want to explain if it affects your
178. 7:18portfolio, what should you do as an
179. 7:19investor? Here's what you do, and I'm
180. 7:21going to back it up with some data.
181. 7:23Listen very carefully. We looked 20
182. 7:26years of real Indian market data. I have
183. 7:28the Nifty TRI. This is the total returns
184. 7:31index. It [music] basically looks at
185. 7:33Nifty and includes the dividends as
186. 7:35well. It's a true picture of Nifty.
187. 7:38Then I have gold prices, and I'm also
188. 7:41going to include debt prices at 7%
189. 7:44return. Now, I have taken four
190. 7:47scenarios.
191. 7:48The first scenario is a person investing
192. 7:511 lakh rupees in equity. Second person
193. 7:53is investing 1 lakh in debt only. The
194. 7:56first one is equity only. The third
195. 7:58person investing 1 lakh in gold only.
196. 8:02And this fourth person, this guy is
197. 8:04doing a little bit of everything. This
198. 8:06diversified guy. All right. I know what
199. 8:08you're thinking.
200. 8:10I know what you're thinking. That's not
201. 8:11the answer. Look at it really carefully.
202. 8:14It's going to surprise you. And what
203. 8:15we've done is we've assumed 33,000
204. 8:17rupees in all three assets once a year.
205. 8:20So, it's easy to calculate on an Excel
206. 8:22sheet.
207. 8:22Person one invested only in equity, and
208. 8:25as we know, equity gives very good
209. 8:27returns, but is it? So, you can see 20
210. 8:30lakh became 78 lakhs. That's an XIRR of
211. 8:3412.7%.
212. 8:35But, look carefully.
213. 8:37Don't just look at returns. I want you
214. 8:40to look at volatility, too.
215. 8:42Volatility is that
216. 8:44You know, that heartbeat that goes
217. 8:47when you look at your portfolio.
218. 8:50If you've ever felt that, "Yeah, my
219. 8:51stock is down."
220. 8:52Volatility affects you. So, high
221. 8:55volatility is a bad thing. Now, let's
222. 8:57look at person two.
223. 8:58He invested in debt. The 20 lakhs became
224. 9:0041 lakhs.
225. 9:02And there's no volatility.
226. 9:05All right. Remember, money investing is
227. 9:08more about the relationship of risk and
228. 9:10reward, and not just reward. I think
229. 9:12everyone on the internet is saying,
230. 9:14"Invest here, you'll make percent a year
231. 9:16CAGR." That's not the true picture.
232. 9:18Also, look at the risk side. Now, let's
233. 9:20look at person three. Only gold, his 20
234. 9:23lakh becomes 1.22 crores with the
235. 9:26highest XIRR in this case, 16.47%.
236. 9:31And person four with a diversified
237. 9:33portfolio who has a little bit in
238. 9:34everything, this 20 lakh becomes 80 lakh
239. 9:38rupees.
240. 9:39The volatility though is lower at
241. 9:4210.49%.
242. 9:44And it has a good sharp ratio.
243. 9:46And here, [music] I'll admit there's a
244. 9:48bias.
245. 9:49Obviously, the gold portfolio will show
246. 9:52the best returns because we already know
247. 9:53gold has done well.
248. 9:55So, what I'll do is 2025-2026
249. 9:58has this bias of gold doing well. But if
250. 10:00you remove those 2 years and check the
251. 10:03same data, the results will actually
252. 10:05surprise you. Equity turns 18 lakhs to
253. 10:0766.85 [music]
254. 10:09lakhs. Gold becomes 43 lakhs. And the
255. 10:11same diversified portfolio is 48 lakhs.
256. 10:15Higher than gold.
257. 10:18I'm going to say this again.
258. 10:20Higher than gold.
259. 10:23The equity also had the highest
260. 10:25volatility in these portfolios at
261. 10:2728.38%.
262. 10:29Gold was 12% and the balanced one was
263. 10:328.79%.
264. 10:34My point is very simple.
265. 10:36Every 10 years there'll be some asset
266. 10:39which will really outperform. You don't
267. 10:42know which asset it is.
268. 10:44But does this mean that the gold
269. 10:46portfolio is the best? Does it mean that
270. 10:48the balanced one is the best? Let me
271. 10:50show you a chart here. Look at this.
272. 10:52You see this beautiful sideways chart?
273. 10:56That's gold.
274. 10:58Let me zoom out. And if you zoom out, we
275. 10:59can see that sideways turning into an
276. 11:01upside. That is gold. I want you to see
277. 11:06equities. Over here, equities for a long
278. 11:08time in a certain period gave negative
279. 11:10returns very quickly, scaring the
280. 11:13bejeezus out of you.
281. 11:14But then, the opposite happened. It just
282. 11:16moved up as well.
283. 11:18My point is quite simple over here. If
284. 11:21you look at any little period and decide
285. 11:23that's what the asset is,
286. 11:25you're wrong.
287. 11:26If you're trying to predict which asset
288. 11:28will do the best based on the moving
289. 11:30average and the calculation of all of
290. 11:31these quant things,
291. 11:32you will be wrong. If you find the
292. 11:35combination of all of these two things
293. 11:37and you can predict when to buy the
294. 11:38stock,
295. 11:39you know I'm going to say, you'll be
296. 11:40wrong. No one really knows which asset
297. 11:42will do what. If you can divide it and
298. 11:44have a diversified portfolio, that's
299. 11:45probably a good idea.
300. 11:48Now you will say you already know this
301. 11:50and I completely understand. You see
302. 11:52guys, you'll say every time Prateek
303. 11:54comes, Zerodha says the same thing. We
304. 11:56have to.
305. 11:57Our fight maybe is against you
306. 12:00overthinking your portfolio and the
307. 12:02media. They make it sound like it's the
308. 12:04end of the world, but it's not. In your
309. 12:07strategy, nothing really changes. So our
310. 12:10job as educators is to come back and
311. 12:13tell you it's all right. Look at this
312. 12:15data. Look at this data. Look at this
313. 12:16data so that you can decide. Do me one
314. 12:19favor. If you consider yourself a zero
315. 12:21owner and you've taken maybe more than
316. 12:24two or three episodes and you've liked
317. 12:25it, share this video with one person or
318. 12:27just tell them verbally because I get so
319. 12:29many DMs of regular viewers asking me,
320. 12:32"What should I do because this has
321. 12:34happened?"
322. 12:35>> [music]
323. 12:35>> And as educators, it's important for us
324. 12:37to come back every single time and
325. 12:39remind you so you can be
326. 12:42I'm a long-term investor. If you
327. 12:44understand this, put it in the comments.
328. 12:45I'm a zero owner long-term investor. If
329. 12:47you have any questions, also put it up.
330. 12:49We'll answer in the comments. Hope you
331. 12:51enjoyed this. Say thanks to the zero one
332. 12:53team. Thank you and bye-bye.