One of the dumbest option to reduce gold import into India..
By vanny
@vandana7 (98830)
India
January 22, 2013 11:11am CST
Indians dont eat gold...at least not in large quantities.
Gold has few industrial applications, including beauty treatments.
So why are Indians crazy for gold? Dont tell me it is only demand supply curve..
Even after adopting contemporary lifestyle and attire, an Indian woman would prefer wearing heavy brocade sarees that has gold or silver woven into it, and it will be passed down to the next generation. And of course, the jewelry that looks stunning. However, there are artificial options that are equally beautiful. And then there are designer wears which are unique. Despite cheaper and more "stylish" options, women here still opt for gold jewelry. Why?
Because in the time of crisis this metal is going to help them. That is the traditional view. Few are willing to face the facts that thieves have become smarter since those days, and so have dacoits. They also dont want to face the fact that chances of them recovering their gold following any theft are remote. Gold can be smelted and transformed into a nugget in less than 3 hours. And what is their guarantee that the gold being sold to them by their reliable jeweler is indeed the 22 carat stuff. It is generally 2 to 6 carats lower. This is cheating, but few people buy gold ornaments with proper bills. So jewelers get away with such things, especially if the jewelry is made to order and therefore, it is left with the jeweler.
Now consider this scenario...cash account deficit touches 10 percent. Therefore, the country has to borrow heavily to pay for essential imports (read oil). This also means much higher interest rates due to lower rating by reputed rating agencies. That causes more dent in CAD, and more subsidies are cut. Food becomes expensive so also clothes. Man can do without gold, but not without food. So we might decide to sell gold then. But hey, the market has dried up. Everybody is concerned about food, right? So then the price of gold keeps coming down steadily to match upto the European Standards. That is according to me future trends and forecasts.
But again...coming to our government. It is trying to curtail gold imports by imposing heavy duties on the gold importing companies.
I think that is dumb. That expense will be passed on to the consumer. And in the interim, smuggling will start flourishing in the country.
Here is my alternative...which I think will be very effective. Ban mortgage of gold for loans. Your call...
1 person likes this
3 responses
@veganbliss (3895)
• Adelaide, Australia
25 Jan 13
...Or you could start exploring India for oil & then you won't need to bother with gold! We did that here in this state very recently. We found billions of barrels of oil out in the desert worth trillions of dollars in today's money just sitting there waiting to be dug up. It's supposed to make our debt-ridden, almost zero-revenue state rich very fast. They will need to do it by fracking though, & there's bound to be opposition to that. I can't imagine why on earth they hadn't found it sooner. Do they have opposition to mining & drilling in India too?
@veganbliss (3895)
• Adelaide, Australia
25 Jan 13
Thank you
Maybe you could try drilling under the sea?
Maybe you could try drilling under the sea?
@Professor2010 (20162)
• India
24 Jan 13
Vandy
You are aware of the sharp rise in gold prices, there are so many reasons but one of the most important is our craziness for this yello metal, some thing it is the best form of saving and investment..In dowry gold jewelry is a must...
My advise one should not buy the so called 'guaranteed jewelry '; it is pure cheating, i know the inner story, we had gold jewelry business for years.
@vandana7 (98830)
• India
24 Jan 13
I have been screaming my guts about this guaranteed jewelry thing...though I am not an insider..lol
An average person does not know how to differentiate between different carats of gold. So what the person can be getting would be 18 or even less carat stuff, and the person may be presuming he got 22 or so.
The worst thing is...even the purity tests that Tanishq and other businesses use...is only about superficial purity not the purity inside. When will people wisen up? :(
Its better to buy gold plated jewelry and use it for functions and ceremonies, and buy gold coins and place them inside the cupboard for long long time till the thief comes to know about it..lol
@thesids (22180)
• Bhubaneswar, India
23 Jan 13
As long as people continue buying stuff without proper bills and evade taxes, the cash deficit would continue. And even if they did pay the taxes, the present Indian scenario where every other minister seems to be going all out for scams - which they know would never be asked for a refund even if they were caught red handed - the Indian people know that the deficit would always exist.
Now, as the deficit would continue to exist either way, they are trying to make some more moolah for them by imposing heavy duties on Gold. It is a smart move on their part as they still operate by the traditional borrowed economic plans and not by what they should have been.
Mortgaging gold for loans is an unwilling thing to happen just because many people who purchase all that gold, prefer to hoard them in some bank lockers (thanks to their knowledge and reality - about the thieves and dacoits) and these buyers just use only a part of what they have in store with them. My Aunt's youngest daughter has about 3 kilos of this metal and has all of it stored in the bank locker. Neither we nor the daughter knows that they (her in-laws) have paid taxes on that gold or not) and neither has she even used most of it anytime. What I mean to say is that if they are already hoarding it in the banks, why not take some money on that which they can use?
