3:17 pm IST
Sep 7, 2012

Economy & Business

RBI Warns Against Gold Investment

    • Never believe a word until the government or policy makers deny it. This is probably one of the best contrarian indicators.

    • Very well said Alok. Government wants everyone to remain poor slaves. "Use our fiat currency not gold" is the same motto used thoughout history by banks, governments and money exchanges up until their currency collapses. The average life of fiat currencies is 14 years. How long has gold maintained purchasing power?

    • Well said Alok. Only a fool would invest in fiat currency paper markets. Gold has maintained its purchasing power for thousands of years. The average lifetime of a fiat currency is 14 years.

    • Historically, gold imports have been hardly 5 - 7 % of India's total imports. Now, even those are falling, so there is no reason to worry. If gold imports are bad, why did RBI itself buy more than 200 tons two years back? In fact, gold and property are the only investments where investors have consistently made money. But the poor cannot buy property, so they have only Gold.

    • if the RBI is so interested in the goo of the people then it should 1) get the inflation down 2) pay more interest than the inflation.

      if by holding rupee the depositor is paying the debtor (by far the govt and real estate speculators) the use his money then eventually people will move to gold as a store of value.

    • Investment in gold is a wise decision, as at anytime it can be converted into cash with higher rates as gold prices are all times high than anyother forms of movable investments.

    • suggestion of mr RBI is perhaps helping all family to keep distance from gold as far as possible as price is high and invest in other areas of business to earn better and live better. If poor family block their funds in gold then more volume would be involved and there may be crisis in family management. But Hindu spiritual feelings and family marriage,s needs would compel the families to allocate funds for gold at minimum levels. But this suggestion is not valid for comparatively better financial status families. It is not bad to hold gold if you can afford to hold it for any future use as this work as best security of life during distress. Let us enjoy and relax with or without gold. It is the fortune of a person.

    • Gold is going to hit 50K in next two year means 66.66% returns.So Gold is always Gold keep inevsting on it.

    • The advice by the Governor is example how our bureaucrats are away from the major class in India i.e poor .
      The poor people if want to invest has no option better than gold Because in last decade most of the small cooperative banks in which the poor people are invested are stopped or merged due to corruption and many reason . The officer like Mr. Chakrabarty shall give good and confidant option to poor

    • no question should arise for poor and rich. those efforts they can go for gold. now govt is loosing that why creating and arising hurdles. people already invested or going for gold investments must be benefited in future. if RBI officials now restricting to buy gold from banks then why they allowed to sell them to publics earlier?

    • If Gold is not a Good Investment then WHY ? Department of Post (India Post ) selling GOLD COINS with stamp of Gold Purity insted of gold Jewellery, what India Post think that people bye it and then melt it for making a Jewellery.

    • Because all banks in yearly ending automatic deduction income tex on FD term scheme, so Mr RBI firstly resolved your policy on fix deposited.


    • "Investing" in gold in India does not make much sense. Most people buy 22k gold jewelry, and pay "making charges" and "wastage charges" on it. So right off the bat, they are only getting about 95% by value, at most, of the gold they pay for. Then when it is time to sell the gold, they only get back from 70-85% of that remaining gold value, after all the scams of "wastage", "commissions", "brokerage fees" and the biggest scam, the "factor", which is never explained satisfactorily. So let's say you buy $1000 in gold jewelry, you get about $950 of actual gold. Then you go to sell it, and you get 65-75% of the price you originally paid. For you to just break even, the price of gold has to climb anywhere from 33% to 50%, depending on many variables, including the inflation factor.

      That's just to break even. How long will it take for gold prices to go that high, do you think? It hasn't done too well in the past several years, and people who bought gold jewelry in the past 6 years are still waiting to break even. On top of that, in India you have to account for the inflation factor, which is very tricky. Gold prices are dollar-denominated, and India largely controls its exchange rates. So with inflation running in double-digits, one would expect that exchange rates would follow suit, but they don't. If you bought gold in India a year ago(when this article was written), let's say at $1700, you paid around Rs. 93,000. Now with the price of gold at $1250, that is nominally worth Rs. 78,000. But that Rs. 78,000 is only worth what Rs. 70,000 was a year ago. So you are 23k in the hole. Let say you try to sell it now, you will get, in all likelihood, no more than Rs. 65,000, or less than 60,000 of last year's rupees, In short, you are now 33k in the hole on a single ounce of gold, Unless you bought it in the form of hallmarked coins, in which case you might fare just a little bit better. The question now is, when will gold go back to $1700, and how much will inflation eat into the rupees you paid?

      For the wealthy, it doesn't matter because they usually pay for it with concealed income, and they have a lot more opportunity to wear it. For others, it hasn't been a good investment, and with the structure of retail gold repurchasing, it is an extremely bad choice for ordinary people.

    • The big problem of inflation.Do you know ? The big problem is bank reserve of economic & inflation

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