Pi Attitude Zone: Material Status
“Good morning to the day! And next: my gold!”. So begins Volpone, a play by Ben Jonson, one of Shakespeare’s contemporaries. It’s about a miser’s greedy obsession with the ‘yellow metal’, and the unscrupulous measures he is prepared to take to get more of it. Not until James Bond 007 confronted Auric Goldfinger was the precious substance so avidly sought after.
Until, that is, a gold rush took a hold of modern India, and captured its imagination. India is already the world’s largest consumer of gold.
What’s it all for, exactly? A certain Datta Phuge, a wealthy West Indian business tycoon, has commissioned a chain-mail shirt fashioned from solid gold links; this impressive garment weighs in at over 3 kilos, and cost its proud owner a quarter of a million US dollars. If Mr. Phuge were to add a few more items of clothing in the same style, he would be… well… worth his weight in gold. He has already hired a posse of bodyguards so that he can show off his acquisition in public.
But the obsession is not only a folly of the super-rich. Relatively poor folk in Southern India have little use for savings accounts, preferring to sink whatever wealth they accumulate into gold jewelry. Such purchases have doubled in ten years
The obsession is so pervasive that India’s government has started to panic, on the basis that the outflow of capital for gold purchases has put severe strain on the country’s balance of payments. To make matters worse, wealth stored in bullion or gold artifacts (estimated at half of all private household savings) just sits there, unavailable for investment in infrastructure or business enterprises. Repeated government efforts to licence or control gold imports, or to ban them outright, have been circumvented by smugglers. When enough consumers want something, they usually get it.
As a last resort, gold-hoarders have recently been urged to take out loans using their treasure-pile as collateral, thereby at least getting their money circulating again. No figures seem to be available for the proportion of these loans that go to buying… yet more gold. (The gleaming Mr. Phuge, for instance, has recently ordered a new mobile phone, made of… you guessed).
As good as gold? Not for India…Zone: Material Status Country: Asia / Pacific Product – Financial