Investing in Indian Gold


". . .you need to know the cultural role gold plays around the world if you want to position yourself for optimal gains."

The gods must be gold bugs. . .

In India, it's considered auspicious to buy gold during the holiday of Diwali. Diwali is the Festival of Lights shared by members of the Buddhist, Hindu, Jain, and Sikh faiths, where the religious celebrate the triumph of good over evil.

Local sources say around 40% of India's annual gold sales come during Diwali.

In 2008, celebrants who bought gold during Diwalióat the end of Octoberódid so at the perfect time, when gold prices neared $700 per ounce.

It's an international story of faith and fortune that you won't hear much about in the western media, but you need to know the cultural role gold plays around the world if you want to position yourself for optimal gains.

The World Gold Council's (WGC) February 2009 Gold Demand Trends report showed a "spectacular" 107% increase in Indian gold jewelry demand in the fourth quarter of 2008, compared to the same period in 2007.

Piety may have been the main motivator. . .or it could have been profit.

The WGC correlates the Diwali '08 demand spike to shrewd investment strategies and well-timed buying on dips throughout the early year's gold price weakness.

The WGC and India's national mail system India Post also stimulated gold demand with a new product. . .a new gold coin series in India's post offices sold like hotcakes. In a bit over two weeks, 8,500 coins were sold.

Along with Brazil, China, and Russia, India has been part of the BRIC club of top emerging markets. The immense expansion of wealth since the year 2000 has lifted millions out of poverty and elevated the investment profile and attractiveness of the Bombay Stock Exchange.

But Indians have had much more time to digest the bad news that was only starting to work its way into market pricing when Diwali came around in 2007.

Gold buying during Diwali '08 may have been more of an insurance policy against currency volatility and weakening international trade than a holy duty.

Wherever you are, fortune is sure to smile on gold buyers as long as international uncertainty holds sway.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe