A friend of mine shared the historical prices (in INR) of gold in the last 50 years. It got me thinking what caused the steep rise in Gold prices in the last decade. This is in no way meant to be a well thought of analysis... I am just bored this weekend and I took it upon me to see if there is some useful trend.
I noticed that for the most part since Indian independence 10USD worth of rupees invariably fetched 1gram of gold in India. But since 2002, the price of gold seems to have been decoupled from that of USD. The good news is since 2013 there seems to be a reversal of this trend... Between late 2001 and early 2002 the US begins its war on terror and by late 2013 US has withdrawn its troop significantly from Afghanistan and Iraq. Could this be the factor that drove the decoupling? I have prepared this chart to illustrate this trend. Check it out.
Gold is part and parcel of Indian culture... People have lamented about the price of gold over the years. Due to the heavy demand for gold and heavy import duties, smuggling was rampant in the 70s and 80s. When import duties were relaxed it sure did reduce smuggling, but the price of gold in India was still very closely linked to the price of dollar... import duties didn't seem to have much of an impact. So I think the RBI's recent restriction on duty free gold imports will hardly have an effect... Lets just hope that the US doesn't go into another war :)
I noticed that for the most part since Indian independence 10USD worth of rupees invariably fetched 1gram of gold in India. But since 2002, the price of gold seems to have been decoupled from that of USD. The good news is since 2013 there seems to be a reversal of this trend... Between late 2001 and early 2002 the US begins its war on terror and by late 2013 US has withdrawn its troop significantly from Afghanistan and Iraq. Could this be the factor that drove the decoupling? I have prepared this chart to illustrate this trend. Check it out.
Gold is part and parcel of Indian culture... People have lamented about the price of gold over the years. Due to the heavy demand for gold and heavy import duties, smuggling was rampant in the 70s and 80s. When import duties were relaxed it sure did reduce smuggling, but the price of gold in India was still very closely linked to the price of dollar... import duties didn't seem to have much of an impact. So I think the RBI's recent restriction on duty free gold imports will hardly have an effect... Lets just hope that the US doesn't go into another war :)
No comments:
Post a Comment