Receding headache

On the gold, which has lost more than a quarter of its value over the past six months
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First Published: Sat, Jun 29 2013. 12 24 AM IST
Photo: Bloomberg
Photo: Bloomberg
John Maynard Keynes famously dismissed it as a barbarous relic. It has been something of a barbarous headache for economic policymakers in India. Few things get the finance ministry and the Reserve Bank of India speaking on the same wavelength. Gold is one of them.
Now, after a fantastic bull run, gold prices have collapsed. The yellow metal has lost more than a quarter of its value over the past six months. The global price for an ounce of yellow metal has fallen from $1,675 at the end of 2012 to $1,202 on the last trading day of June. Also, domestic prices tumbled in tandem.
Indian households have bought gold and real estate because they offered protection against high inflation. It was not a bad decision, with real returns on bank deposits negative.
Now, gold prices are falling, real estate is weakening, and inflation is softening. It is perhaps time to take a fresh look at household portfolios.
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First Published: Sat, Jun 29 2013. 12 24 AM IST
More Topics: quick edit | gold prices | RBI |
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