We just visited India’s biggest gold market maker. We entered a decrepit building with towering slums around it. We got in a creaky elevator little bigger than a phone booth, with an attendant who opens and shuts the door. The elevator looked about a hundred years old. We got to our floor and went down a filthy hallway so narrow that you had to turn your shoulders to get by other people in the hall. Finally, we got to this gold merchant’s office.
When we got inside, we entered a modern-looking office — clean, wooden floors; air-conditioned; a wall-mounted TV playing the Indian version of CNBC. You’d never know the squalor and chaos that exists just outside the door.
We were led to a small conference room where we waited for our man. After a short time, the gold broker walked in — he’s a big bear of man with gold hanging on his neck, his wrists — even his eyeglasses were rimmed with gold. He represented the prosperous side of Mumbai…
We got his take on the gold market. He’s bullish, which you may discount, but remember he’s a broker. He makes money on transactions, not on the gold price. He tells us India’s gold demand is strong and growing. India has long been a net importer of gold, since it makes very little gold itself. It also makes up nearly a third of total demand for gold. ‘People here buy gold routinely, as a store of wealth,’ he said. ‘People from the villages even buy gold and bury it in their backyards.’
It’s something we’ve found often on our New Silk Road Tour. People are increasingly buying gold — whether in Dubai or Mumbai. For these cultures, unlike for most Americans, buying gold is a social norm, a rather mainstream place to park your wealth. India, as it continues to grow in wealth, should be a steady buyer of gold for years to come.
By Chris Mayer