Can gold prices soar to six digit levels?
Well such speculations have been rife since 2009.
Especially given the pace at which inflation has been eating away into the purchasing power of the Rupee.
However, that certainly does not show in the gold buying appetite of Indian investors and consumers. Gold does not seem to have lost any luster as far as Indians are concerned.
Now is there any reason for Indians to not buy gold ? Well, our culture still encourages gifting gold in ceremonies and weddings.
Buffett may not agree with this.
But Indians consider gold's importance as store of value much more effective than its lack of productive usage. It is very surprising to see that more than 25% of world's gold production is consumed by Indians. This has been going on since ages.
With inflation showing no signs of relenting, all the more reason to hoard on the metal. More so because buying gold has been one of the oldest form of investment in Indian households, much before stocks, mutual funds and fixed deposits became commonplace.
Even today, the rural rich park most of their surplus in gold. Indians consider Gold as ' STREE APATH DHANA'( meaning emergency cash for the lady ).That is how giving out gold to the bride during marriages started. The practice was misused subsequently is an altogether different story.
Earlier this year, the government had changed the duty structure on gold. That made buying the precious metal more expensive. The government hoped that this would lessen the import bill that gets inflated with large doses of gold purchase. This measure has brought down gold imports marginally.
The lure of gold for Indians is far from satisfied, rightfully though in the world of fiat currencies.