Avatar Aang
TF Ace
As far as I understand, RBI and other banks need reliable investments. Gold has been reliable since ancient times. However reliable does not necessarily mean best.RBI and other major central banks are buying more than 1000 tn/per year gold from last 3 years (last 3 years average is double than preceeding 10 years)....RBI is not doing SIP...So it shows which is more reliable investment.
I have never heard that RBI or other banks invests in equities, please correct me if I am wrong. Banks function on NII by distributing loans. Whereas it's the insurance companies which invest in equities.
Equity investments might give muted returns for upcoming 5-10 years. However in the longer run it's the equities (not all) which will always outperform Gold.