Most Indians are chrysophilists. There was good news for them a few days ago. The object of their love, which had been getting dearer, suddenly got cheap.
Chrysophilists are people who have King Midas as their guardian angel or kuladevata. He has recently been in a benign mood. The price of gold came down a few days ago, after reaching record highs in October.
Market-watchers say, if you have weddings in the family, this is the time to buy (unless prices have soared by the time you get to read this). Time, tide and gold prices wait for none, and there’s no imp like Rumpelstiltskin who would make gold from your straw.
No imp, but a Donald Trump did the trick—gold prices fell in the days after Trump was elected. Not that the cowboy POTUS-elect had hit on pots of Apache gold. It was just that his election kindled investors’ faith in the stock market and in the US dollar, and they began selling some of their gold to buy stocks. Gold gets dearer when stocks fall and vice versa.
Most US presidents come in with this Midas touch, but lose the shine soon. Trump’s first avatar eight years ago saw stock prices soaring and gold prices plummeting. But his four-year pantomime show in the White House made gold dearer by half or more. Blame the pandemic, too, when stocks crashed and people saved in gold. Now, trust less in Trump and wait for the Federal Reserve’s December meeting. If they cut interest rates, gold could soar again.
Reuters
Philosophers may dismiss it as yellow metal, but gold has been viewed the safest bet in hard times.
British commandos sent on risky missions are issued gold coins in their survival kit, in the hope that they can buy their passage back through enemy lines. Veteran commandos say, even the hardest hostile heart melts at the sight of gold.
Gold prices have been soaring over the last few months for two reasons. One, there are two hot wars going on currently, and any war would shake the faith of investors in stocks and compel them to stock up gold. Two, Russia, one of the largest producers of gold, is itself in combat.
Russia, China and Australia have more gold deposits, but Indians have more gold in bank vaults, lockers, almirahs, and under the mattresses. India mines hardly any gold, and we buy almost a fifth of the gold in the world market. Open the Fort Knox, and Indians would buy half the stuff.
Imports were nearly banned till 1990, and gold used to be smuggled in by Haji Mastans and Karim Lalas. Their bell-bottomed henchmen picked them up from nightly beaches showing torn halves of 100-rupee notes as their passwords. Now with imports on, and gold prices in India nearly at par with global rates, smugglers have shifted to more precious and pernicious maal—drugs.
Indians of all types are besotted with gold. As the The Economist wrote, “Newly wed brides are given enough jewellery to break their necks. Peasants store their pitiful savings in trinkets. Wise-guys sport rings like knuckle-dusters and tycoons with broken balance-sheets offer gold at temples in return for redemption.”
Nirmala Sitharaman and her economists tell us there are better ways to hoard wealth and still earn, than in gold which gives neither interest nor dividends. We don’t listen. Several reasons. You can buy or sell gold easily; its prices have only soared save occasional impish slips; it is easy to conceal; it can be pawned easily.
Who showed the way? The government! Recall how our rulers pawned gold reserves in the Bank of England in 1991 and earned money for our daily bread, roti or gruel.
prasannan@theweek.in