India isn’t going for the gold right now, and this is impacting gold prices worldwide.
Gold is a commodity, like silver, wheat, coffee, sugar and crude oil (please see my earlier Pumped Up Prices blog). People all over the world buy it for jewelry, but it’s also bought and sold as an investment. And, it’s considered a pretty safe one; gold can be sold at any time for money.
India is the world’s biggest buyer of gold. It accounts for about a quarter of the world’s gold demand. The precious metal carries a deep cultural meaning in India. Parents use it for their daughter’s weddings, and it’s given as religious gifts.
Recently, the Indian government decided they were going to put a higher tax on gold, and charge more money to import gold into India. Indian buyers backed off and gold shops shut their doors in protest.
This sudden decrease in demand took the worldwide price of gold down with it. It’s a basic rule of economics, supply and demand: If demand goes down, and the supply remains unchanged, the price goes down too.
Will this have a lasting impact on gold prices worldwide? That’s up for debate. What’s not up for debate is the 10 million Indian brides every year who want to glimmer in gold.
Peace Love Profits,