In this week’s newsletter, we talk about antimicrobial resistance, rising gold prices, diversification and more.
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Quote of the day 
“The best investment you can make is in yourself.” – Warren Buffett
Could we be heading back to the pre-antibiotic era soon?
If you get a small cut while chopping vegetables, you’d normally slap on a band-aid, and you’re good to go. But what if that minor cut gets infected and no antibiotic could help? That’s the reality we’re inching towards, all thanks to something called antimicrobial resistance, or AMR. 1
AMR is when bacteria and parasites evolve to outsmart the drugs and medicines we use to kill them. That means antibiotics stop working. And this could have devastating consequences.
According to some experts, by 2050, AMR could lead to 39 million deaths globally, including 2 million in India alone.2
Worse, global healthcare costs could surge by $159 billion annually.
And over 1.2 million people died in 2019 from infections that couldn’t be treated with existing drugs. Essentially, we’re inching towards a world where antibiotics, the very drugs that have saved millions of lives, might stop working altogether.
But to understand how we got here, let’s rewind a bit.
See, antibiotics were once seen as miracle drugs. Discovered by accident in 1928 by scientist Alexander Fleming, the mould-based antibiotic, penicillin, changed medicine forever. Infections that were once death sentences were suddenly curable with a few pills. Surgeries became safer, organ transplants possible, and modern medicine thrived.
But over time, we got a little too comfortable.
Doctors started prescribing antibiotics for everything, even viral infections that antibiotics can’t treat.
Then in the 1950s, animal farming became more industrialised and farmers began adding antibiotics to animal feed to prevent infections and help them grow faster. This was seen as a win for productivity, but it came at a heavy price. Because over time, bacteria in animals evolved to become resistant to these drugs. And those same drug-resistant bacteria can jump to humans, potentially threatening both animal and human health.
Today, we have superbugs – the bacteria that no longer respond to the usual antibiotics. The problem is particularly severe in countries like India, where antibiotics are over-prescribed and easily available without a prescription. Pharmacies often sell antibiotics over the counter, and doctors sometimes overuse them due to incentives from pharma companies.
Hence, today, we’ve reached a point where even the strongest antibiotics are starting to fail.
The problem is especially acute in LMICs (low and middle-income countries). Hospitals, which should be places of healing, have become breeding grounds for the most stubborn, drug-resistant infections. Around 11% of patients in these regions develop infections after surgery, a direct consequence of AMR.3 And in places where healthcare systems are underfunded, drug-resistant infections like sepsis spread rapidly, often with devastating consequences.
Take Nigeria, where doctors tried every standard antibiotic to treat a newborn suffering from sepsis, a life-threatening infection. Nothing worked. They had to rely on meropenem, one of the most powerful antibiotics, but even that wasn’t guaranteed to work.
And it’s not just Nigeria. In war-torn areas like Ukraine, Gaza, and Sudan, AMR is making already dire situations worse. Imagine getting wounded in battle and not having the right antibiotics to treat the infection. In Gaza alone, antibiotic resistance has surged by 300% in recent years. And when people flee these zones, they also unknowingly carry drug-resistant bacteria with them, spreading AMR far and wide.
So why aren’t we developing new antibiotics faster if the problem is so severe?
The issue is simple: money. Developing new antibiotics can take 10 to 15 years and costs over a billion dollars.
New antibiotics are also seen as the “last line of defense” against deadly bacteria as doctors use them sparingly to prevent resistance from building up. Plus, antibiotics are generally sold at lower prices. So, when you combine low sales volumes with low prices, the profit margins shrink. This has led many big pharma companies to exit the antibiotics market altogether.
But it’s not all doom and gloom.
Some pharmaceutical companies and governments are stepping up to fight AMR.
In India, Wockhardt is preparing to launch Zaynich (WCK 5222) by 2025 to fight multi-drug resistant (MDR) and extensively drug-resistant (XDR) pathogens.4
Globally, companies like GSK, Pfizer, and Merck are working on new antibiotics, with Basilea Pharmaceutica developing treatments to combat the cause of hospital-acquired infections.
There are also global initiatives like the AMR Action Fund aiming to bring 2-4 new antibiotics to market by 2030. And the U.S. Department of Health and Human Services (HHS) is funding the TARGET Project, which uses artificial intelligence (AI) to accelerate the discovery of new antibiotics.5
But here’s the thing.
While developing new antibiotics is crucial, the real challenge lies in making antibiotic development sustainable. And if we don’t get this right, AMR could very well take us back to the pre-antibiotic era, where even the smallest infection could be life-threatening.
So, what’s the solution, you ask?
Well, no single country can tackle AMR alone. It’s a global problem, and it needs a global solution.
We need countries, industries, and health systems to come together.
Tighter regulations on antibiotic use, bigger investments in drug research, and raising awareness about the dangers of overusing antibiotics are the only ways to stop AMR in its tracks.
And the time to act is now.
Story sources: DownToEarth [1]; ncbi.nlm.nih.gov [2], The Hindu [3]; Business Standard [4]; U.S. Deparment of Health and Human Services [5]
What’s the gold rally telling us?
Gold prices have been on a tear over the last year. Just 12 months ago, gold was trading at ₹58,000 per 10 grams. Today, it’s brushing up against ₹77,000. And this isn’t a one-off moment; it follows another solid rise in 2022 when prices stood at ₹50,000.
So, why is everyone suddenly eyeing gold again?
Well, gold has always been a bit dramatic, reacting to the world’s economic twists and turns. But this isn’t just any ordinary gold rally. It’s part of a bigger story that involves currencies, central banks, and a world economy that’s growing increasingly unstable.
Let’s start with gold’s long-time partner, the US dollar. You see, gold is a bit like oil. Globally, people buy and sell gold using the dollar. And this means the value of Gold is inextricably tied to the value of the dollar. Therefore, a weaker dollar makes gold appear more affordable for investors using other currencies. And that’s exactly what’s been happening. The dollar has lost ground, making gold more attractive and driving up its demand.1
But the dollar weakening isn’t the whole story. There’s more, and it starts with the folks in charge of managing the world’s largest economy: the US Federal Reserve.
After hiking interest rates aggressively in 2022, the Fed finally hit pause in 2023. And recently, it did something it hasn’t done in four years. It cut rates. This had ripple effects. When interest rates drop, bond yields (the return investors get for holding bonds) fall too.2 So, when bonds don’t offer much in the way of returns, investors look for alternatives. That’s where gold comes in. It doesn’t pay interest, but it’s a solid store of value. And when bonds aren’t delivering, gold shines as the safer bet.
Then there’s global inflation. Rising prices are eating into the value of currencies everywhere. Central banks have been printing money like there’s no tomorrow. But the more money that floods the system, the less valuable it becomes. And when that happens, investors turn to gold, the age-old hedge against inflation. Gold’s been a tangible, finite resource for centuries, and its value remains, even when paper currencies falter.
But you might wonder, don’t these factors always influence gold prices? Yes, they do.
So how do we know if this rally has legs and if gold is undervalued or overvalued?
A good place to start is by looking at central banks. In 2022, they bought a record-breaking 1,136 tonnes of gold—the highest in over 50 years. And in just the first half of 2024, they’ve added another 483 tonnes.3
Why the gold rush? Well, central banks are hedging against potential currency crises and inflation. They’re not just issuing money but they’re protecting themselves from its risks by increasing their gold reserves.
However, the problem with gold buying data is that it gives you just the number of gold purchased, without any comparison for analysis.
And that’s where money supply comes in.
The money supply, or the total currency floating around in an economy, has exploded over the last few decades. In the US, the broadest measure, the M2 money supply (which includes cash, checking deposits, and savings), has more than quadrupled since the early 2000s. Here’s a look:
US M2 Money Supply over the years
And gold has reliably tracked money supply growth for the last 50 years, according to the World Gold Council.4 Why? Two reasons: the US dollar is the global reserve currency, and gold is priced in dollars on most exchanges.
So, as more money floods the market, people lose faith in paper currencies. Gold, being a finite resource, holds its value and becomes the go-to asset for wealth protection.
Now, while a moderate rise in money supply is generally desirable, when it spikes too much, it spells trouble. A significant jump in M2 can indicate too much money chasing too few goods, which pushes inflation higher and erodes the value of currency and other assets. In these times, investors flock to safe-haven gold, and central banks might increase their gold reserves to shield themselves from the impacts of inflation.
If you want to take this analysis further, there’s something called the M2 to Gold ratio. It compares the price of gold to the money supply, giving us a sense of whether gold is under or overvalued.
And finally, we can’t ignore the US national debt, which has skyrocketed from $5.77 trillion in 2000 to an eye-watering $35 trillion today.5 As debt rises, the risk of economic instability grows, prompting more investors to hedge with gold.
So yeah, while the gold rally we’re witnessing lately can be attributed to various factors, the link between gold and money supply is an interesting one to follow.
It’s hard to say if gold will continue its rally, but the factors driving gold’s rise—the weakening dollar, inflation, central bank buying, and skyrocketing debt—aren’t going away anytime soon.
After all, this rally isn’t just about gold prices going up. It’s about what those rising prices are signaling. The world economy is in a precarious position, and gold is serving as a barometer for that uncertainty. This rally could be hinting at something much larger shift in the financial system as we know it.
Story Sources: Reuters [1], Morningstar [2], World Gold Council [3] [4], FiscalData [5]
Today’s Discussion 
: Brand Taglines
#AskFinshots 
This week’s question comes from Divya Bansal from Delhi University. Divya asked—
“Hey Finshots, how do I know if I’m adequately diversified in my investments?”
Hi Divya, the simplest strategy is the 100-age rule. Here’s how it works—
Subtract your age from 100, and invest that percentage of your savings in equity instruments like equity-linked mutual funds or stocks. So say, if you’re 20, you’d put 80% into equity.
While the rest should go into safer, non-equity options like debt funds, fixed deposits or bonds and even liquid funds that can be easily converted into cash for emergencies. So, in this case, 20% of your savings would go there.
The idea is that as you get older, you start to reduce your exposure to riskier investments and balance things out.
Sounds easy, right?
But here’s the thing. This rule is super generic. And it doesn’t account for your personal risk appetite, the crazy volatility in the market or your unique financial goals. A few years down the line, you and a friend might earn the same salary, but if you’re all about making aggressive gains while your friend is more risk-averse, you’ll need different strategies. You might want to retire early, while your friend might plan to work until 60.
So yeah, the 100-age rule is cool to get started, but it’s not a one-size-fits-all formula. So, remember to sit down with a financial planner and come up with a personalised strategy that fits you!
Have a question for us at Finshots & Ditto?
Write to us at colleges@joinditto.in. And we’ll get our founders/experts to answer!
Answer of the day: USA holds the largest gold reserves in the world.
The brands behind the line:
1/ Jo Khaaye Kho Jaaye – 5 Star
2/ Har Ghar Kuch Kehta Hai – Asian Paints
3/ Have It Your Way – Burger King
4/ Wish Karo Dish Karo – Dish TV
5/ G Maane Genius – Parle G
6/ The Complete Man – Raymond
7/ Tyres with Muscles – MRF Tyres
How many were you able to guess?
And that’s all for today folks!
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