According to the CBS news show “60 Minutes” on Feb. 12th, something like 32% of the gold in the world is sent by producers to India, a country that imports virtually all of its gold, since it produces only a scant 1% of the world’s supply itself.
The 1.2 billion folks who live in that country are in love with the yellow stuff. A lot of it is used for wedding bling. One wedding shown on “60 Minutes” lasted for five days, and it looked like everyone was weighed down with jewelry, all of which seemed to have a gold theme. Apparently the family of the bride and the family of the groom measure suitability by the amount of gold displayed by each.
Here’s the interesting thing. Indians feel the price of gold will never go down. (Talk about bubblicious thinking!) Even more interesting, they look at the gold they own as savings. And that got me to thinking. I don’t like gold much. It just sits there, does not pay dividends and doesn’t grow like a good company does. And probably everyone in the world has at least some of the stuff or can get it. (Poor people in India now buy gold by the gram, but they buy it.) So, you can make an argument that there’s only so much of the metal, but mines and producers seem to keep finding a supply. But the idea of looking at gold as savings is interesting isn’t it? Do I think gold will go up forever? No. But if India controls the spot price of gold, I may rethink my position. So long as India provides a steady demand, maybe the price will stay high, at least for some time.
India, though, has always been nuts about gold, and, even so, the price has often been relatively low.