Titan

Message

Originally posted by FutureBull

IMHO, buying gold can never be called criminal. This is the only way to protect yourself against general stupidity by govt. and central banks. If Indians are buying gold by truckload, there is something wrong with the currency. Nobody asks RBI why are they printing 3% of  currency by way OMO every year. If that doesn't amount to playing with currency, what else would be. We keep a keen eye on what FED does in US but skip the sins committed by RBI which is printing and help finance horrible policies followed by UPA. This creates inflation and any sane person trying to protect himself should buy some gold. The figure of 3 lac+ Cr. for gold imports is highly manipulated figure. I came to know that gold is the best way to launder money and whenever any country faces crisis of confidence this is the most preferred way for money to flow out. Look at China where similar story is playing out but they have reserves to fight it but we don't and hence depreciation. UPA knows raising tax on gold imports to 30-40% would hurt their friends and families only. 

I agree. 

Consider this.....Since Independence, rupee has been steadily depreciating against USD whereas USD itself has depreciated greatly against Gold (from USD 35/- to USD 1350/- for one ounce in same time frame). 

Indians can not open foreign currency deposit in local banks and remitting and investing money abroad is way too complicated for ordinary Indian. So, in absence of freedom on capital account, the most simple way to protect against this sort of currency depreciation and resultant loss of purchasing power is to buy Gold.

If RBI and Government impose quantitative restrictions, that will encourage smuggling but Gold demand will not go down.

I think it is high time our economy managers at RBI and Finance ministry understand the real reasons behind attraction of Gold for ordinary Indians and start addressing the real issues. Then and then only, Gold import will see legitimate decline.