India is a fascinating country when it comes to the study of gold and silver. The world tries to find a correlation between gold prices and oil, platinum, palladium, the US dollar and even inflation indices. Each of these linkages appears relevant for a while but none has withstood the test of time.

India appears to follows a different tune, especially when gold prices begin to skyrocket. At such times, India begins to consume more silver and actually begins to export gold. It must be remembered that the people who sell gold are invariably the same ones who sell silver as well. Hence, when goldsmiths confront consumer resistance on account of soaring gold prices—Indians can be intuitive when it comes to gold prices—they begin to peddle silver instead.

This graph shows the silver demand, its import and its availability in stock from 2004 to 2008. Ahmed Raza Khan / Mint

Almost all the gold and silver used for jewellery and coins are imported into India. A peculiar aspect of this trade is that virtually all import of gold and silver into India is legal because the government allows it, albeit through notified agencies. But the export of gold and silver is invariably clandestine, because the government has strange rules which do not allow their sale outside the country unless some prescribed value-addition norms are met.

Also Read RN Bhaskar’s earlier columns

With gold offtake plummeting to negligible levels, import has virtually ground to a standstill for the past six months. Silver, on the contrary, has continued to do well. Silver imports touched a record level of 5,000 tonnes last year. Of course, some of this silver is still lying as stocks. It will get sold to Indian consumers, or if the price of gold crashes, may be used to pay for the gold that is imported. Like gold, silver, too, gets smuggled out when the price of gold is attractive enough for Indian consumers.

The best way to gauge the mood of the markets is by looking at the way both gold and silver prices move. For the past two years, gold and silver prices have been divergent. This can mean that either silver prices will go up, or gold prices will come down. Perhaps a bit of both will happen till they move in sync.

That could explain why gold has found it hard to pierce the $1,000 (Rs47,900) an ounce barrier. It tried, but is now apparently on the retreat.


In the palm of the trader

The battle for smartphones has become a bit more interesting. The latest challenger is battle-scarred Palm Inc., which in its heyday was the equivalent of an iPhone that Apple Inc. launched a couple of years ago.

It was the first to combine a digital diary and organizer with a phone when it came up with its Palm Visor and then with Palm Treo. Then it lost ground to Nokia Oyj and Samsung Electronics Co. Ltd and later to Apple. However, a couple of years ago, it came up with a cuter looking Palm Centro, and just last week with Palm Pre, which threatens to rival iPhone both in features and pricing.

In India, however, the fight appears to become a bit messy. Many traders have boycotted Palm’s products. One reason could be the traders’ ire at Palm listing on its website the recommended retail price of Rs13,390 for its Palm Centro. The trade used to peddle it for at least Rs20,000 a piece earlier. The boycott continues despite Palm putting up, rather unusually, its list of traders in India. Did Palm cut into the traders’ margins? Maybe not. Go to eBay India and you will see any brand new Palm Centro being sold for Rs10,500 apiece. Surely, the sellers on eBay must be making a profit. Could it be that the traders want more than the Rs5,000 margin they can make on each Palm product?


Another public offering?

Is Sanjay Dalmia trying to stage a comeback to the capital markets? It would appear so, if one has to go by a posting on the the website of Indo-Canadian Business Ventures.

Never mind that his previous ventures have not endeared him too much to his shareholders in chemicals and textiles company GHCL Ltd. According to the website, Dalmia wants to set up a $200 billion (Rs9.6 trillion) global retail chain—Rosebys—over the next five years. He believes it will have a presence in almost in all the countries in the world. Rosebys is a 300-outlet textile retail chain in the UK, which Dalmia acquired for $45 million in 2006. The current meldown has compelled it to shutter some stores. With the Dalmia group’s turnover currently pegged at about Rs2,000-2,500 crore, one wonders whether these plans are ambitious or will merely be a pipe dream.

R.N. Bhaskar runs a company with significant interests in distance learning and examination certification and writes on corporate and business policy issues. Comments on this column are welcome at