Monday, March 9, 2009

India’s gold stockpile, Kerala’s gold rush

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It is well-known that private gold holdings in India are colossal. Government stock is (according to September 2008 figures) 357.7 tonnes or 3.1% of the country’s forex reserves (http://en.wikipedia.org/wiki/Official_gold_reserves). This is comparatively very low. The value keeps changing depending on the fluctuations of the Indian Rupee-US Dollar parity.
But privately held gold in India is estimated at 50,000 tonnes! (Business Line http://www.thehindubusinessline.com/2009/01/16/stories/2009011650260800.htm). The country could be gold bankers to the world!
The Business Line report reminds us that S. Venkataramanan, the then Governor of the Reserve Bank of India (RBI) had mooted the idea of a Gold Bank way back in 1992 and the then Finance Minister Manmohan Singh had included the proposal in that year’s Central Budget. But a senior official of the RBI shot down the scheme. If implemented, it could have harnessed at least a part of this silent wealth for more meaningful use.
Annually, 700 tonnes of the yellow metal is sold in the country, according to P. Kishore in his column ‘Business Boom’ in today’s Malayala Manorama.
Who buys it?
Kishore says 17% of the gold is gobbled up by the tiny State of Kerala which accounts for about 3% of India’s population. That works out to 119 tonnes of gold. A sovereign coin is 8 gms. The arithmetic is simple. The people of Kerala buy about 15 million sovereigns a year or about half a sovereign per head.
A sovereign costs about Rs.11000 these days!
Good investment? I suppose so. But how many can afford?

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7 comments:

mahesh said...

south means gold....gold and gold...








need bpo jobs without a single rupee!!!!!!!! a genuine job from home.


Work from home

Kariyachan said...

The picture shows what an upper middle class marriage is all about.
At the current rate, gold is a very good investment option. Due to recession, the gold prices will only appreciate in the coming future.

Maddy said...

my god - how will that girl or her parents sleep properly ? with all that gold around her neck. maybe it goes into a locker, to add up to the many tonnes of gold. money that if in circulation can otherwise do good to the masses.

Abraham Tharakan said...

Mahesh, I think the craving for gold is spread all over India.

Abraham Tharakan said...

Kariyachan, many experts seem to agree with your view about gold as an investment.

Abraham Tharakan said...

Maddy, I think that India should have a re-look at the Gold Bank proposal.

Happy Kitten said...

Gold is becoming a headache these days... the thieves are becoming more daring.

When will the craze for this yellow metal decline?

nd does not the picture look so gross?

Even if one puts the metal in the locker, how long before the thieves become more desperate and breaks open even those too?