Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
Gold & Silver Prices in

Understanding Asian gold demand

IMG Auteur
Published : November 19th, 2012
566 words - Reading time : 1 - 2 minutes
( 4 votes, 4.5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...





There is growing awareness that gold is accumulating in Asia. Indians have for a long time been the largest buyers of gold and have a tradition of giving gold as gifts at auspicious times. This gold is mostly classified as jewellery in the statistics, and it is assumed by westerners that a rising gold price will dampen demand from this source. This misunderstands the Indian market on many levels.

The reason gold is bought as jewellery is because the processing costs are very low. It is more accurately a reliable store of value, which for Indians is the real point. Furthermore, India’s experience with paper money has not been happy. Imagine a young couple who married in the mid-1960s. The bride might have been given five or six ounces of gold in the form of bangles and other jewellery items. The cost including an Indian jeweller’s mark-up in 1965 would have been about 200 rupees per ounce at pure equivalent, making a dowry of 1,200 rupees (1965 exchange rate was Rs4.76 to US$1.00). Every Diwali, wedding anniversary and birth of a child, the dutiful husband would have bought more gold if he could afford it. Some would have been passed on to their children as they got married and had families of their own.

Today the price of gold is about 95,000 rupees. As a form of savings gold has beaten every other investment our Indian couple could have made, hands down. They would now be in their sixties, and looking forward to a comfortable retirement, centred on family, children and grandchildren. Contrast this with our more sophisticated world, with our underfunded pensions falling short of what we actually need to live on. Many of us will rely on the state for a minimal pension, for which the state will heavily tax our children. And the Western equivalent of our Indian couple faces the prospect of their retirement annuity, if they have one, buying less and less as they get older.

So don’t dismiss India’s love of gold as just tradition. Indians in their investment choices have shown considerably greater wisdom than most of their Western counterparts. And it is not just Indians; there is the whole of South East Asia, and the Chinese who have much catching up to do having been banned from owning gold until only eight years ago. According to Albert Cheng of the World Gold Council, the Chinese public in that short time have now overtaken Indians as a buyer of gold. The difference between the Indians and the Chinese is the Indian government has adopted Keynes as its guru, so it hates gold, thinking its people are backward. The Chinese government instead is encouraging its population to buy more and more. Between China, India and all the other gold-loving countries in South-east Asia, there are now nearly three billion people certain in the knowledge that gold is a far better long-term store of value than any paper currency.

The other conclusion we can draw from this is that price doesn’t matter. Look what’s happened since gold peaked a year ago: Asian buying has increased all the time while Western fund managers and the media have bickered about whether gold is going up or down. But the Asians instinctively know that what is actually happening is that paper money is going down, and hard experience tells them it never goes up.



Data and Statistics for these countries : China | India | All
Gold and Silver Prices for these countries : China | India | All
<< Previous article
Rate : Average note :4.5 (4 votes)
>> Next article is the website of Alasdair Macleod, who has a background as a stockbroker, banker and economist. Alasdair is available for seminars, speeches and interviews. Please check on Services to get further detalils.
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Trump’s Best Debate Performance ...
23 Octkevthorne-1
A vote for that woman is a vote for WWIII. Mr Trump is a builder, not a warmonger - do you want a future on earth for you and yours - or Armageddo...
Silver Bull Market in Force
22 OctS W.
Interesting tech analysis here. Good stuff as I have never looked at 'full bars' closing above or below a 20 bar MA. Only ever the close p...
The Fascist Threat
22 Octsam_site
Your idea that extreme right and left fascism meet is brought out in the Spanish Civil War. The globalists created right wing fascism in Germ...
Trump’s Best Debate Performance ...
21 OctThe Recusant-1
Yes, this WAS his best debate performance! But for all the reasons you mentioned, he failed to deliver. And that's why he will be defeated next mon...
Trump VS. Clinton-Who’s “Better”...
21 OctDoom1
Uh...I'm not sure I understand the conclusion here.
Trump’s Best Debate Performance ...
20 OctS W.0
I have only watched the 3rd debate. I am not American. Clinton is a far more polished debater and was far better prepared than Trump. I agr...
Fifteen Years Into the Afghan Wa...
19 Octsam_site
Follow the money folks. Heroin production jumped 13X when the CIA globalists took over Afghan production. You'll never get the sheeple to see the...
My Most Passionate Warning Yet
17 Octstackerguy551
Thank you Mr. Hoffman. I am concerned by the tone of your article, it is pretty scary to say WWIII is probable, and, so it may be, considering some...
Most commented articlesFavoritesMore...
World PM Newsflow