Sunday, 5 December 2010

All that glitters is gold

They say all that glitters is not gold. But today, that might be a slightly misplaced sentiment. Gold is glittering so much that everything seems to pale into significance. I mean the price of gold. If you haven't noticed, it has skyrocketed. And the cause of it is coming from an unlikely direction.

Gold hit an all time high price of $1424 a troy ounce in Nov. It seems to be zooming northward. I haven't done the math, (after all this is a Sunday post !), but gold might have performed as well as equities as an investment vehicle in the recent past. That's a little funny given the significant difference in risk profiles.

Cut, to a completely different angle. One of the fundamental cultural differences between Indians and Chinese comes in the area of addiction to the yellow metal. Indians simply love gold and can't resist hoarding it. Gold jewelery, that is. It is passed from generation to generation; safely stored in bank lockers. They are taken out only for weddings, when Rajalakshmis try to outdo each other in the amount of yellow they display. Regular readers will remember that the aforesaid lady is in a regular battle with the weigh scale. But for once, she doesn't mind adding substantially to it, by decking herself from head to toe (literally) in gold.

Madame Wang has different tastes. She simply doesn't like gold at all. She won't be caught dead wearing yellow; convincing proof that the nomenclature of the yellow race is a misnomer.She has a fancy for diamonds; especially those paid for by the male species, but that's another story.

End result. China used to consume some 200 tonnes. Indians gobble up some 600 tonnes. No contest.

No longer so. Chinese imports surged five fold in 2010. Consumption stands now at some 450 tonnes. The unthinkable may happen - China may overtake India as the largest consumer of gold.

What on earth is happening ?? Has a cataclysmic change happen in the gemological tastes of Madame Wang. Yes; but not what you might think. She still doesn't like to wear yellow. But she has money flowing through her ears. She doesn't know what to do with it. What can she do ? She gave it to the Americans until they can take no more. She started giving it to even the Greeks, but there are far less Marias than there are Wangs. Who else to give it to ?? So she's now started to buy gold instead. Not jewelery, but just plain bullion. stocking the stuff.

So here's a tip to Rajalakshmi. Start selling all that's in the bank locker bit by bit to Madam Wang. In a trickle. Empty it over the next two years. You'll make a fortune. And walk lightly into the next wedding !!!

PS. Yes , I know its a Sunday, but .............

15 comments:

gils said...

lol :) is this meant for the rajalakshmi of ur house? :D ipdilam subtle hint kuduthu jewellery vangarathulenthu ess aga try panrathuku badila "neeye thangam..unakkedhuku thangam" nu solli paakalamay :))))

zeno said...

Well a post from you is a post :)
I used to wonder why it has been rising rising.I was thinking, may be it was due to our commodity trading or high demand but wasnt aware of the source of the demand.
BTW if they are buying, shldnt we too be buying? i mean wont the price be still rising so we can buy now and sell later!

Kiwibloke said...

Rajalaxmis are moving on to platinum. So mme Wang won't have too much competition. See the number of old established jewelers advertising Pt in India. Coincidentially in Mendelev's methodical organization of all known elements Pt and Au are neighbors.

J said...

A business post doesn't become a Sunday post by merely alluding to poor Rajalakshmi's proportions - nice try :) Anyway I've missed your business blogs... I hear that even in India a lot of people are buying gold coins and bars rather than just jewelry and as the trend moves to buying gold more for speculation/investment, it seems ripe for another bubble.

KC said...

Interesting stuff, surely China is all set to take numero uno position in all areas, markets, graphs and economies. But i wonder if Rajalakshmis will be bothered by this and sell even a miligram of gold unless her family is in financial crises. Flaunting gold ornaments is in our culture, deep in the roots. Trading in bars, bullions and coins is a good idea though for business-like Rajalakshmis.

RamMmm said...

What sire, the last para is anathema to what Rajalakshmi wanted throughout her life? :-) No way, she'll part with her ensemble. Buying, selling are for investors. In India, gold jewellery is a one-way ticket. Until circumstances are dire, there will be no parting. Damn the Wangs, we'll topple them over when it comes to taking the horse to water!

Ramesh said...

@gils - you couldn't be wider off the mark :):):)

@zeno - As always zeno, the wise. Yes good investment to make, but timing of exit is critical. This is a bubble in the making

@kiwi - Why Platinum, I can never understand, but such are the mysteries of the female mind !!

@J - Yes indeed. Where punters rush, you can bet there is a bubble.

@KC - Absolutely right. There's no way any of our women would ever sell their gold. Perish the thought. Still no harm in needling Rajalakshmi !

@RamMmm - Very true. No way will this happen. That's why I can blog about it with gay abandon.

@

le embrouille blogueur said...

Ah ... I remember back in the day during Diwali in Chennai .... the jewelry stores would be packed in T.Nagar. ....am not sure with the prices so high if that happens anymore. But Rajalakshmi can and will always love the yellow. Thanks for solving this mystery for me. The other day HH asked me why is gold so expensive and all I could come up with was because the earth is running out of stock. She did not believe a word. Tomorrow is going to be enlightenment day.Or should I say ... The Golden Hour !!

Sandhya Sriram said...

i was checking for my golden treasure till sunday evening, the tenth time on that day, desparately waiting that it would show up.. and then shut down my pc thinking, alas ... maybe one of those really busy weekends for Ramesh. but you did post one and i am not first to comment :-(

i have not been able to unravel this mystery of the way gold prices are sky rocketing. but i also cannot appreciate the fascination our people have got for gold. people feel they are being insulted if one does not wear a heavily loaded golden stuff for their occassions on silk saree.

for one cousin's wedding, i decided to wear a normal saree and and no heavy jewellery and it took me many more marriages sinking in gold and silk to correct the bad name it got for me.

while this is not a typical sunday post - but your inimitable style has brought down the heaviness even from Rajalakshmi's kilos of gold.

Vishal said...

Mysteries of Rajalakshmi's mind... yes, they buy it only to display at weddings. If there had to be a business option out of this, there are many other options too which anyways does not go well with Rajalakshmis. Bigger mystery for me is whether you tip will ever touch heads of Rajalakshmis. There is still a chance as they do not prefer to put heavy gold on their heads. ;)

ambulisamma said...

Oh ho.Should you come to Tnagar and see what rajalakshmiu's are doing.Just been to buy little ornament and am amazed at the price post wastage calculation,a gram comes close to 2000 Rs.No way that we can buy gold here after.Do you know even for coins and bars they put wastage here in India.Am shuddering at the thought of buying gold.

raghavendra kotla said...

Hi Ramesh, yesterday I was attending Phil's farewell party (after amazing 42 years with Unilever). I heard you couldn't attend because of short notice. Phil was saying few lucky moments in his life in the farewell speech. One of them he mentioned is meeting you and working with you :-). BLN attended the dinner.

Ramesh said...

@Vishal - Oh haven't you seen it go into their heads - literally and figuratively :):)

@ambulisamma - Yes gold merchants are only a shade better than loan sharks !

@Kotla - Thanks. Yes, I heard about it and will post separately as well.

Vishal said...

Hahahaha!

Ramesh said...

@blogueur - Welcome back. As ambulisamma has commented, T Nagar hasn't changed one bit - more crowded if at all with the gold diggers.

@sandhya - Awww; you are the perfect antidote to anybody inflicted with blogger's block ! Try the no frills bit again - I'm sure amongst the younger generation, many would love to stop doubling their weights at functions with their attires.

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