Gold is only insurance against dollar, not an investment option: Macquarie's Viktor Shvets

While some people suggest that one can use digital currencies to hedge risks, Shvets does not believe it could work out in the same way. "Digital currencies really behave much more like equities rather than a protection mechanism," he explained.

While gold is the ultimate protection and insurance during challenging times, it cannot be considered an investment, according to Viktor Shvets, Global Strategist at Macquarie Capital.

In an exclusive conversation with Moneycontrol, Shvets noted that for investors looking for protection in a disruptive global environment then “gold is the answer".

“If you believe that we might go from a cold wars to hot wars, if you believe that we will be much more aggressively deglobalizing, if you believe the capital flows will be fracturing on a global basis, if you believe that climate change will be far more disruptive than what people assume today, if you believe in pandemics, if you believe in any catastrophic outcomes that potentially could happen globally, gold is your answer… (but) gold is not an investment,” he said.

Amidst global volatility, gold prices both in India and globally have been on a steady rise. After hitting nearly Rs 1 lakh per 10 grams of gold on Friday last week, gold prices in India saw a minor dip to Rs 95,560 on April 30. Globally, COMEX Gold futures have also moderated by around 0.8 percent to $3,314, as of Tuesday.

Watch the full interview with Viktor Shvets here.

Despite the immense interest in the asset, Shvets explained why he believes that the metal is not a good investment.

"It doesn't generate returns. It doesn't even have much usage beyond customer usage. It does not protect you against most conventional things. It even doesn't have a relationship anymore to interest rates in any form. It's a pure insurance policy," Shvets explained.

Shevts added that one cannot consider gold as a form of currency and that it could not replace the US dollar. "It can never be a medium of exchange, but it does provide insurance," he said noting that when risks rise, it usually leads to a high US dollar.

While some people suggest that one can use digital currencies to hedge risks, Shvets does not believe it could work out in the same way. "Digital currencies really behave much more like equities rather than a protection mechanism," he explained.