The price of gold has crossed $1,000 per ounce for the first time ever (http://news.bbc.co.uk/1/hi/business/7294040.stm). If I was an economist, I would embark on a complex explanation of why this has happened that would include an arcane discussion of the economic slump and demand for stable investment. Being given, as I am, to more pedestrian pondering, I wonder how this will impact the desi demand for the yellow stuff.
It never fails to amaze me how much we in India, Pakistan, Bangladesh and Sri Lanka are fond of gold. Those gun-glorifying gangsta rappers, with all their bling-bling are complete minimalists compare to our very own Bappi Lahiri, the original baap of bling. It is hardly surprising that India is the world’s largest consumer of gold. Just take a look at any desi bride burdened with her tolas and tolas of gold jewellery and you can see why this is the case.
So what is our fascination with what is no more than a shiny metal? It is such a deep and intense fascination that it has found its way into our imagined geography (think of terms like ‘sone ki chidiya’ or ‘shonar bangla’) and even into our language and its idioms (‘sone pe suhaga’). So great is our love affair with gold that an otherwise artistic people (as even a cursory study of our historic and contemporary art would reveal) take leave of all their innate aesthetic sense. Don’t we choose and value our jewellery simply on the basis of the intrinsic value of its gold? Don’t we scoff at the delicate, the intricate and the artistic and make a mad beeline for the large, the chunky, the heavy and the generally ugly? Just stroll about in Mumbai’s Zaveri Bazaar and look at the most expensive trinkets on display. Invariably, they will be the most hideous ones. We have the most impeccable taste in silks, brocades, henna patterns, food and other fine stuff. This discernment is what sustained artistic endeavour throughout our history, and continues to do so today. But there is something about gold that turns even the gentlest, most refined aunty into a gluttonous megalomaniac devoid of taste!
This makes me think it might be a good idea to give up my plans of buying a new TV and fridge for my mom, the next time I go to India. I’ll just get her a couple of gold bangles instead. It will probably be cheaper and will surely earn me a heck of a lot more achchha beta brownie points. So what do I think the price hike will do to gold demand in India? I think it will drive it up. Now, with these crazy prices, even the tiniest trinkets will command great brag value. If I remember Economics 101 correctly, this is true price inelastic demand. May the bling bling on!