Indians’ gold holdings soar over $100bn in a yr

The beauty of gold lies not only in its glitter, but also in its ability to make you happy in bad times. Its glitter pierced through the gloom of the financial slump with the yellow metal emerging as the safest investment the world over. A day before Lehman's bankruptcy, an ounce of gold could be bought at $784. Three days later it hit $922 in global markets. In India, the per 10 gram price of gold correspondingly jumped from Rs 11,640 to Rs 13,541.      As the financial crisis deepened, nervous investors bought gold to preserve their wealth. By February 19, 2009, prices went up to $ 1007/ounce (Rs 16,090/10gm). It softened in last week of February 2009 as global macro economic factors started showing positive signs and money started chasing stocks again. After a slight dip, prices have come back to peak levels of around $1,000/- ounce and Rs 16,000/10gm at present. Investors today view gold as a hedge against high inflation and a weak dollar.      While Indian gold consumption is low, prices are soaring because of globaltrends. Even if we assume that privately held gold in Indian households has remained stagnant at 15,000 tonnes in the last one year because of slackening demand, the value of this holding has gone up from $ 378 billion then to $ 482 billion now, factoring in the change in dollar rates. Thank Lehman Brothers for this cool 27% gain of $104 billion. At today's rates, Indians with gold are richer by Rs 6 lakh crore.      "People tend to buy gold whenever there is uncertainty in the financial markets. Gold offers liquidity, convenience and value addition," says Ajay Mitra, MD, World Gold Council (India). Private gold holding in India is around 15,000 tonnes, according to WGC—the highest in the world. Compare that with the US government holding of just 4,000 tonnes.