Finance, Forex and Investments

India and the gold market?

As I understand it a very good chunk of the gold being mined today ends up in India for the bridal jewelry market. Therefore- A. If there some massive global currency crises, does India end up rich? B. If Indian tastes/culture changes and they decide they would rather spend their money on BMW's or whatever instead of gold, does the price of gold take a huge hit? C. Does the fact that the gold in question goes into jewelry mean that A is not all that relevant because it's not bullion/coins?

Public Comments

1. you need to look at indias population. they have on of the highest populations in a small density area. gold is supply and demand if india dosent demand it then another country will pick it up for a cheaper price. you are looking at a global scale not just india when you look at this issue. gold has investor and investor value only its only valuable if people find it to be valuable
2. Jewelry is usually not considered an effective measure of the gold market as: 1. As you mentioned, it is not bullion and therefore doesn't have quite the rigid standards in weight and purity as bars or coins (weight obviously varies in jewelry and most are not pure .999 gold, but rather in mixed metal alloys) 2. It is a by-product of the gold market in that the market decides the flow of the jewelry industry rather than vice versa Gold along with some other metals like silver are currently in a slump following a recent mini-bubble that just popped, so I'd stay away from it for a long time.
3. Gold market is really grow in india because all indian love gold.
4. Indian people are crazy for gold also population of india is very large so demand of gold in india never end.
5. It is indeed true that India is the world's largest importer of gold. India's insatiable desire for gold stems from its cultural tradition of amassing a large amount of gold jewellery viz. evident in Indian marriages where the bride is adorned in gold. Gold consumption in India goes up significantly during the marriage season. With more than 50% of Indians below the age of 25, the next decade would be a real boom period for wedding planners & of course gold merchants in India. But the current rise of gold is due to the burgeoning budget deficits with major economies of the world. But to answer your questions - A: If there is some massive currency crisis, I would put my bet on countries which own a large number of gold mines who can mine gold at will. Indians who have a lot of gold with them would also obviously be better off than say an American who holds only dollars (which for some reason has lost its value). B: If the 1 billion people in India suddenly decide to stop buying gold, the price of Gold would definitely take a hit. C: Gold jewellery is still gold so it definitely has its value To read more check out this short article: http://demystifyinginvestments.blogspot.com/2011/07/investing-in-gold-glitter-of-yellow.html
6. Option B is best for price crises of gold no other alternative for any country because most of gold store in Indian people.
7. Currency is big problem for any kind of metal or stock market so A is my choice.
8. >As I understand it a very good chunk of the gold being mined today ends up in India for the bridal jewelry market. Stop right there. When you are thinking about gold, the gold currently being mined is not very relevant. Most of the gold ever mined is still around. When you buy a gold chain, some of that gold was mined by Egyptians, some of it by Aztecs, some of it in the California Gold Rush, etc.. The Indians like all of that. >A. If there some massive global currency crises, does India end up rich? No. Only a very small percentage of the world's wealth is in gold. The whole gold supply in the world is $2-3T which is just not that much money in the global scheme of things. India's greatest source of wealth is its human capital and the way that India betters its economy is not raising gold prices but mobilizing people. A global currency crisis would be disaster for India as it would deeply impede that and India has a pretty fragile economy. Raising the price of Indian gold wouldn't help that much. >B. If Indian tastes/culture changes and they decide they would rather spend their money on BMW's or >whatever instead of gold, does the price of gold take a huge hit? A little hit, but the changing cultural thing isn't the problem. The problem is that a global economic downturn wipes out the new Indian middle class that has a huge appetite for buyng gold (and not just as bridal jewelry). That would hit the gold market. >C. Does the fact that the gold in question goes into jewelry mean that A is not all that relevant because it's not bullion/coins? Gold is gold. If there is demand for gold as jewelry it raises global demand for gold and thus its price.