Gold: Demand, Supply and Impact

Gold: Demand, Supply and Impact Introduction India shares a unique relationship with gold, one that is very complex and timeless. From Hindu mythology to various cultural traditions, gold is deeply embedded in the Indian psyche. It’s a symbol of purity, prosperity, good luck, status and wealth. Every Indian, rich or poor, living in city, town or village, is a potential first time buyer or , as in most cases, a repeat buyer. Gold purchases serve a two-fold purpose- that of an ornament and an investment. The emotional and sentimental attachment to gold further adds to the complexity as gold is passed on from one generation to the next. Right from the time a child is born to the time of marriage, gold finds a place in all the rituals and traditions. In addition to this, the religious significance of gold in India means festivals and temple offerings are other important triggers for high sales of gold. Our aim is to study what triggers the Indian consumer to buy gold, the changing trends in purchase behavior, the impact of this on India’s financial stability and to recommend ways to monetize gold or suggest alternate instruments that can curb the investment demand for gold in the country. We analyzed the existing literature on gold to systematically understand current understanding regarding the factors that act as triggers for the Indian gold consumer. We will then compare this with our primary research in an attempt to draw a clearer picture of the gold market in India and suggest ways to monetize it. Section 2: Brief Review of Literature Section 3: Gold: Demand, Supply and Impact on Financial Stability Demand for Gold The ‘Report of the Working Group to Study the Issues Related to Gold and Gold Loans NBFCs in India’, constituted by RBI, states that the demand for gold in India cannot be compared with that of the demand for gold in other parts of the world. The 1.3 plus billion population of India would continue to generate demand for gold, especially through imports. The demand is from both investors in gold and gold jewelry consumers. Due to various cultural, religious, economic and social reasons, the gold demand in India is autonomous. The benefit that it offers by way of long-run inflation hedge, high liquidity and also, the absence of substitutes with similar risk-return profile makes it an attractive asset to store. The convenience of cash based transactions and absence of documentation hassle (no paper trail, tax obligations etc.) further makes it a preferred channel for money laundering. Hence the committee concludes that attempting to curb the gold demand in India would a dif ficult and complex task. Also, historically gold has a been a measure of economic power of kingdoms and nations. In recent times, particularly after the 2008 crisis, gold as an investment asset has drawn attention and the prices of gold soared in the aftermath of the crisis. (International Journal of scientific research and management) Studies show a strong correlation (0.83 for the 2006Q3–2013Q2) between gold imports and inflation expectations of Indian households, indicating that one reason for high gold demand is its use as an inflation hedge. (Selected Issues Paper on India, IMF, 2014) Source: http://www.imf.org/external/pubs/ft/scr/2014/cr1458.pdf Source: http://businesstoday.intoday.in/story/indias-gold-imports-are-starting-to-weigh-down-the-economy/1/195178.html Price Sensitivity of Consumers The Bloomberg BusinessWeek article titled â€Å"Correlations: Indias Gold Grab† says that the 23% fall in gold price since October, 2013 shifted the investors away from gold to risky but high return equities. Contrary to this, the Indian gold consumers took advantage of the price drop. Consequently, the purchases in April and May were so high that it began to show in the widening trade deficit. This mid-April slump was the largest in more than three decades and it pushed the banks, traders, and jewelers in India to import more than 100tons of gold. This indicates the complex behavior of Indian consumers with respect to gold price which does not match the typical investor profile. Yet most buyers of gold consider the metal from both consumption and investment angle. Source: Changing Trends of Consumers Retailers K. Balaji and Dr. Maheshwari in the research paper titled â€Å"A Paradigm Shift in the Buying Behavior of Indians Towards Gold Jewelry – A Theoretical Approach with Reference to the Growth of Branded Retailers† posits that as Indian jewelry market matures, the changing consumer preferences are expected to lead to a more organized industry while share of family jewelers is expected to decline. The Indian consumer is moving from unbranded to branded jewelry with fashion trends dictating more and more of the purchase decisions. Although, currently the market is fragmented across the value chain with more than 30,000 players with modern retailers making only 4-6% of the share. It further states that with rising population and income levels there will be an overall increase in spending, including spending on aspirational products which includes gems jewelry. The tastes are changing and the consumer is focusing on more modern and intricate designs as compared to the traditi onal chunky ones. Isha Datwani, founder of Anmol Jewelers says, â€Å"The biggest change we see is that younger people are buying gold†. This working class of young Indians have their own views and opinions and the role of elders as influencers in gold purchase is reducing. Also this new set of Indian consumers has an increased focus on transparency, service, brands and fashion. Also the new set of branded chains, through innovative branding and advertising, are targeting the aspirational class of Indian women by positioning gold as more than an investment, as something that is deeply rooted in our culture and intended to make a woman look more beautiful. The have resorted to new ways of segmenting and usage (e.g. creating new occasions for purchase) to attract new sets of consumers. Source: Technopak Analysis Section 3: Supply of Gold Impact on Financial Stability Gold supply comes from imports, mining, sales of gold reserves, and â€Å"old gold scrap† (the recycling of gold). (IJSRM volume 2 issue 2 Feb 2014). Against the backdrop of high inflation, negative real deposit rates, gain in international gold prices and expectations of further increase, India’s gold imports increased from about 1.5 percent of GDP in 2004-08 to 3 percent in 2011-13. (Muneesh Kapur and Rakesh Mohan) . Source: http://goldminersreport.com/library/the-ascendency-of-real-gold-demand/ RBI gold swap scheme http://articles.economictimes.indiatimes.com/2014-07-02/news/51030718_1_yellow-metal-gold-international-bullion-banks Source: http://www.dgcmagazine.com/cant-keep-indians-from-their-gold/ A high inflation for long duration lowers the real rates, resulting in increased gold imports and decreased household financial savings. Gold imports in turn weaken the rupee and worsen the current account deficit. (Selected Issues Paper on India, IMF, 2014) Considering the nature of demand for gold in India, restrictions on gold imports should be considered as a temporary measure as over time these may become less effective (e.g.: increase in smuggling). To ensure macroeconomic stability, we need to reduce the gold imports in long run. For this, its demand as ‘store of value’ must be curbed which is possible by lowering inflation and increasing real returns on bank deposits. (India Article IV Consultation, IMF, 2014) Section 4: Measures to moderate the demand for Gold and monetize it The RBI Reports describes various measures to curb the demand for gold and monetize the idle gold stocks: Gold Loans: These are a flexible channel to improve the financial inclusion in the country, especially for the illiterate and semi-literate people who may need to raise loans for medical emergency or need education loans or even for business loans by SMEs. There is a huge untapped gold stock lying idle in hands of individuals (anywhere between 18000 to 20000 tonnes), out of which only a small fraction (about 3 %) is being monetized through gold loans. Gold Bank: The Group has suggested the setting up of ‘Gold Bank’ or ‘Bullion Corporation of India’ as a ‘backstop facility’ that will lend (provide refinancing) to institutions against the collateral of gold. It can also play a role in retailing functions like recycling and pooling of idle gold. Gold Recycling: There is a large stock of idle gold, both with individuals and with institutions like Temples as devotees offer gold jewellery in large quantities. There is also estimated 300 tonnes of scrap gold that comes into the system every year. So, by finding means to recycle the idle and scrap gold, we can turn an unproductive asset into a financially productive one. Buy-back by Banks: Currently, banks are operating a uni-directional channel- importing and selling gold. The Group has suggested that the canalising agencies like banks and nominated agencies should function bi-directionally, i.e., they should also be able to buy back tamper proof gold coins at transparent prices. Monetization through banks: Another alternative that the paper suggests is to allow banks to accept gold deposits from the public and use these gold deposits as a hedge, thus monetizing gold till it is redeemed. New gold-backed products: The Working Group has also suggested introduction of gold-back products to monetize the idle gold stocks and at the same time reduce the demand for physical gold. These are broadly classified into five categories: Products like Modified Gold Deposit Scheme in which gold taken as deposit is recycled to meet domestic demand and returned at maturity, thus monetizing privately held gold stocks. Products like Gold Accumulation Plan, Gold Certificate, e-Gold Plan through Banking Channel, Paper Gold that facilitate systematic investment in gold. Gold Accumulation Plan would help those who can purchase gold in small amounts and delays the gold imports till the required amount of gold is accumulated and actually delivered. Products like Gold linked Account and Gold Securities which allow active portfolio management by providing flexibility to buy and sell gold similar to ETFs. Under Gold Linked Account the transaction takes place outside the country thus eliminating gold import. Products like Gold linked Dual Account and Gold Securitisation, which are derivative products that enable customers to take positions depending upon their view of gold prices. Products like Gold Pension in which the customer will keep his gold with the bank and in return receive a monthly pension. References: Sheetal Dubey, Anamika Hardia (2014), â€Å"Demand Supply Trends of Sparkling Metal†,  International Journal of scientific research and management (IJSRM). Retrieved from  http://ijsrm.in/v2-i2/7 ijsrm.pdf Muneesh Kapur, Rakesh Mohan (2014), â€Å"India’s Recent Macroeconomic Performance: An  Assessment and Way Forward†, IMF, WP/14/68. Retrieved from  http://www.imf.org/external/pubs/ft/wp/2014/wp1468.pdf International Monetary Fund, Selected Issues Paper on India, January 2014. Retrieved from  http://www.imf.org/external/pubs/ft/scr/2014/cr1458.pdf FICCI-Technopak Report on Unlocking the Potential of India’s Gems Jewelry Sector, January, 2010. K.U.B. Rao and others (2013), Report of the Working Group to Study the Issues Related to Gold Import and Gold Loans NBFCs in India, Reserve Bank Of India. K. Balaji, Dr. Maheshwari (2014), â€Å"A Paradigm Shift in the Buying Behavior of Indians Towards Gold Jewelry – A Theoretical Approach with Reference to the Growth of Branded Retailers† Prabhudatta Mishra, Swansy Afonso (2013), â€Å"Correlations: Indias Gold Grab†, Bloomberg BusinessWeek. Bibliography India, Article IV Consultation (2014), IMF Country Report No. 14/57, http://goldresearcher.com/gold-supply-2/ http://goldresearcher.com/supply-demand/indias-gold-market/

Efficacy of Iraqi Sanctions Essay -- Government Politics Essays

Efficacy of Iraqi Sanctions As United States foreign policy has matured in the wake of the Vietnam Conflict, a seemingly bloodless, less nationally controversial tool than war has emerged. The United States has begun to slap economic sanctions on rogue nations in lieu of or in addition to sending in the Armed Forces. This policy of sanctioning nations begs one to ponder the legitimacy thereof. A specific case to be examined is the Iraqi conflict. In response to Iraqà ­s hostile takeover of Kuwait in 1990, the U.S along with United Nations implemented a sanction against Iraq. After the Gulf War had ceased, a treaty was drafted which included the lifting of the sanctions should Iraq agree to certain stipulations. To this date, the UN has ruled that the treaty has not been upheld by Iraq thus keeping the sanctions in place. In the years since the initial implementation, economic sanctions have proven to be largely ineffective in the achievement of foreign policy goals in Iraq while having produced a number of oth er negative results. Sanctions have not been able to force the Hussein regime out of power nor have they been able to halt Iraqà ­s import and export of key goods. While failing in those ends, sanctions have succeeded in bringing about a massive humanitarian crisis for the Iraqi peopleà ³one which seems may never end. Before the Persian Gulf War, the Iraqi military was one of the best in the Middle East. This fact caused Iraqi leadership to deduce that, being a powerful Mid-eastern force, no one would challenge their hostile take-over of tiny Kuwait. Unfortunately for Iraq, the rest of world did not let this act go unnoticed and began the Gulf War. The once proud Iraqi forces were reduced to almost nothing after the war. Th... ...o death by the economic sanctions and they feel as though there is no end in sight. Tareq Aziz, Iraqi Deputy Prime Minister, sums up the bleak Iraqi sentiments, "We donà ­t see a light at the end of the tunnel. There is a tunnel after the tunnel." ("Press Conference") Works Cited Cortright, David and George A. Lopez. The Sanctions Decade: Assessing UN Strategies in the 1990à ­s. Boulder, CO: Lynne Rienner Publishers, Inc., 2000 "Press Conference of the Iraqi Deputy Prime Minister, Mr. Tareq Aziz." The Digital Voice of Iraq. n. pag. Online. Internet. 21 Oct. 2000. Available FTP: http://www.multimania.com/iraq/tareq-aziz12-11-98.htm Selden, Zachary. Economic Sanctions as Instruments of American Foreign Policy. Westport, CT: Praeger Publishers, 1999 Simons, Geoff. Imposing Economic Sanctions: Legal Remedy or Genocidal Tool?. Sterling, VA: Pluto Press, 1999

Personal Narrative Example Essay

You can call it following in footsteps or walking the same path, but I don’t see it like that. My grandmother calls her daughter, mother calls her sister, and I call her Aunty. She has always been my figure to look up to. She has inspired me to be the person who I truly want to be. My Aunt Marie is a strong, beautiful, and successful woman who, in spite of her work, has always been there for me when it counts in my life. I want to not only follow in her line of work, but I want to have her strength, love, and poise during everything. She is my hero, my guiding light, a woman who has taught me to stay true to myself and become the person I want to be. A conversation, one I fondly remember happened during an evening out to dinner. We had gone to this big burger place; it was one of my brother’s favorite places to eat out. It was just my middle brother, Christopher, me, and my aunt. Of course my brother ordered the biggest burger on the menu, his reasoning, â€Å"A manly man needs a manly burger.† We ladies, on the other hand, ordered a salad. Our topic for discussion was what we planned to do for our future. In my family I have always been the black sheep when it came to what my future entitled. Both of my brothers already knew what their plans were; Stephen is going into electronics and Christopher is becoming a machinist. I, on the other hand, had no clue what I wanted. Sure I had a general idea; something in the medical field, psychologist or something in law. So not very narrow, but at least an idea. At this time I hated this line of discussion. My brothers could say something, but I had nothing. I feel now this was the case since I wanted to make sure the career I chose would be one I enjoyed to work in. Without knowing from this night my aunt would teach me a valuable lesson. This was the first night I told her I was contemplating joining the Army. Out of all people, I suppose it was she I expected the acceptance from. My Aunt joined the Army at just 17 years old and became an MP. My Aunt explained to me how the military is a whole different ball field today than it was when she joined. Do not get me wrong, it is not like she put me down hard and gave me a, â€Å"what the hell would you do that for† response. I was given the best response instead. She proceeded to tell me how the military needs to be a choice I made for myself; that it was a choice I truly needed to be sure about. She also told me if this turned out to be something I wanted to do and it had to be for myself, that she would have some of her agents who work for her talk to me. Each would be from a different branch of the military, and they would explain each one to me so when I chose I would know fully what I was getting into. She wants to make sure my head is on straight before I sign any papers. It makes sense; once papers are signed you are committed for the duration of enlistment. I just hope she knows that I am not doing it because I think she wants me to, but rather I feel it will benefit me for my career choice. As I write this now, it has been four years since this conversation and I have had plenty of time now to think of my future. I can say though that it has not been until the past four months that I have actually figured out what I want to do with my life. I want to do something in Law enforcement; a career, that at the end of, I had made some sort of difference in another personâ⠂¬â„¢s life. That was the main thing for me when I was thinking of my future; I knew whatever I chose to do I wanted it to make a difference. I believe my choice in law enforcement certainly comes from her. I have always had an interest because of being surrounded by it all my life. When we were little I went to work with her and with my brother, Christopher; she showed us all the gadgets her agents used and I was intrigued. As I remember this dinner, I remember her explaining to me how my life is mine; I cannot mimic someone else’s. She told me I needed to explore my options and figure out what I truly want; take in consideration not only the job, but the life it would give to you. I remember her also saying, â€Å"It is not all about the money, sure you should be financially sound, but life is not all about having a lot of money.† These are words to live by in my point of view. So many people today are caught up in the aspect of making so much money they forget what they truly hav e. I want to live my life and be grateful for the little things while still making sure I can financially support myself so I am at least comfortable. I want a life to be proud of. The first step to this, I believe, is college. As a senior now, this has been the fous of our year. I have been so grateful for recently being accepted into my number one, top choice, college. The University of New Haven, on November 18th, 2012 the college sent me its congratulations on being accepted into the college for the fall 2013 semester. I want to go here for the Henry C. Lee College of Criminal Justice and Forensic science. I hope to major in Law Enforcement with a minor in Psychology or Sociology. My Aunt gave me the encouragement to push myself through high school so I can have the future I want. She showed me how anyone can become what she wants if they truly want it. She came from a farm house out in the boonies, into the Army at 17, and now is a renowned member at the DEA office in Washington D.C. She travels the world for her job. Her future is set; she has a 35 year pension from the military, a 401 K in place from her current job that will keep her financially sound way beyond retirement. I want this for myself, a job that will benefit me not only in the moment, but in the long run. She has taught me how when you are my age you cannot think of only right now, you have to think of your future, especially with you career and what it can provide for you in the long run. My aunt has been my role model to look up to for as long as I can remember. She has been the person who I inspire to be. She is a constant beautiful light that has always reminded me to do the right thing. On the night of that conversation I remember thinking, â€Å"Missy don’t you forget tonight, don’t you forget what she is telling you.† I will forever remember this night. Reason, it was the night she taught me the most important lesson ever; to stay true to yourself and create the life you want to live. From the man whose put them in his own words, Dr. Seuss, â€Å"Today you are you, that is truer than true. There is no one alive who is Youer than you.†

Influence Of The Federal Government - 1633 Words

Throughout the years 1877-1981, minority groups employed activism in a variety of guises in the struggle to achieve civil rights. While leading activists could draw on international events to strengthen their cause and enjoyed greater success as the campaign persisted, it ultimately fell to the government to make advances: activists needed a sympathetic president and government to legally push through change, thus the progression of civil rights was arguably dictated more by the current political situation than by the work of activists. The influence of the federal government is further seen by the fact that it both hindered and accomplished change throughout this period. Methods of activism varied between groups, and between time periods, but of the three main forms of activism employed in campaigns (litigation, violence and direct action) direct action was the most successful; minority groups - primarily African-Americans - tired of the slow and inconsistent success in the courts, and so brought direct action to the fore in the 1950s and 60s. Before this time, however, violent measures were prevalent: the Hispanic Las Gorras Blancas campaign was launched in conjunction with the ongoing Apache Wars (the Native Americans’ attempt to have their own recognised lands, which continued into the twentieth century) and although both achieved publicity, they were met unsympathetically by the government, which was justifiably forced to deal with the violence (or what could even beShow MoreRelatedThe Federal Government s Influence On American Freedoms1612 Words   |  7 PagesBetween the years of 1865 and 1914, the federal government has played a major role in shaping American freedoms. These freedoms differed from various social and cultural groups. The federal government sought to expand the American economy and promote the American ideal of equality and freedom. 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