Gold breaks previous all-time high record again; Silver trades over Rs. 1,000 for the first time in almost 7 years

Gold again hit a new all-time high in the Nepalese market today.

According to the official website of the Federation of Nepal Gold and Silver Dealers' Association, fine gold is being traded at Rs. 92,800/- per tola. Similarly, tejabi gold is being traded at Rs. 92,360/- per tola.

This massive price hike of gold in the Nepalese market is in sync with the international gold market. This month, gold pushed above $1,800 an ounce in the international market for the first time since 2011 A.D.

Meanwhile, silver is being traded at Rs.1,005 per tola today. This is the first time silver is being traded at a price of over Rs. 1,000 in almost 7 years. The last time when this happened in the Nepalese market was on September 10, 2013.

There is a logical reason why valuable metals seem to increase in value and demand whenever the financial health of the world begins to stumble. Gold witnessed a bullish rally during the economic meltdown of 2008, a financial crisis that started the Great Recession worldwide. Similarly, gold witnessed another big rally in 2011 when Standard & Poor's downgraded the United States' credit rating, amid market fears about Europe's debt crisis. In fact, gold reached its all-time high the same year.

And now, it is because of the Covid-19 pandemic.

This happens because the economies of the world suffer at times of financial crises. As a result, they will take various measures to ease the pain. This might also mean injecting cash into the economy if required. But no matter what the central banks of the world do, the chances of currency inflation are high.

Because of that, normal people are afraid of keeping their wealth as currency notes of a country since these currencies will lose purchasing power if they are inflated.

Amidst all this, which kind of wealth do you think maintains its value?

Indestructible and long-term valuables of course! In other words, wealth that is tangible doesn't depreciate so easily during hard times.

As a result, people will want to hoard more of the wealth that will keep its value. In other words, people will want as much gold and silver that their money can buy.

Now, by the law of supply and demand, these precious metals will naturally witness a price hike. Since their quantity is limited, the only way to get the amount of gold and silver you want is to pay higher to those who have it.

Furthermore, there is another big reason why gold and silver are trading at high levels in Nepal. In order to make up for the loss of revenue during the pandemic, the Finance Ministry of Nepal has raised customs duty on the import of jewelry, silver, and gold bars. The raised customs tax has been implemented after the budget was passed for the new fiscal year.