Article;
Poke-Me Government is responsible for India's Craze for Gold
My Comment;
Gold does not
depreciate like iron, it rusts, which makes gold a top choice for backing steel
coins and paper currency, it is an ultimate investment which even during
recession pays well. Every government has some gold for bad times; even IMF
accepts gold as security for a loan. People feel secure near gold and nominal
prices can not go below zero because its demand as an investment may decrease
but gold and gold-rings are very popular during marriages. Therefore there is
no doubt that gold is not completely useless. But as an investment they are not
safe when the banking has made paper-gold and other better paying instruments.
Therefore, its physical quantity in not a restriction, now, because nobody
wants their gold now so that we can manage the demand. What will happen when
every body wants to redeem the same day because they are expecting a 20% decrease
in prices and they need the money now because government has banned trade in
gold except jewellery for an unlimited period of time. I think which is the
case now and demand for gold and its prices will become less volatile and
become constant, which could be the best assumption. The price of gold can not
go above but can go down because its demand as an investment has become zero.
We have reduced its usage, its use. Its demand will go down; its price will go
down too (expectation)….
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