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BlackRock CEO: Indians' craze for gold doesn't hel

时间:2024-03-28|浏览:552

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Larry Fink, founder and CEO of BlackRock, the world's largest asset manager, said in his annual letter to shareholders that India's love of gold has neither benefited its economy nor provided investment. bring considerable returns.

"When I visited India last November, I met policymakers who lamented their citizens' love affair with gold," Fink said. "The commodity has underperformed the Indian stock market. Investing in gold is not helping the country's economy either." .”

Gold can be a great store of value, but it cannot stimulate economic growth. When someone puts money in a bank or invests in a house, it creates a multiplier effect that stimulates economic activity. "But what about the gold? It's in the safe," he said.

India is one of the largest gold markets as the precious metal plays an important role in the country's culture. Buying gold during weddings and festivals is often considered auspicious by Indians. It is also considered a safe investment and a symbol of wealth. Investment in gold by Indians can take many forms, including buying jewellery, exchange-traded funds (ETFs) and sovereign gold bond schemes.

Fink took the role of the U.S. capital market in the U.S. economy as an example, emphasizing the importance of the capital market and how it can improve a country's economic status, but gold cannot.

“No other force can lift more people out of poverty or improve the quality of life like capitalism. No other economic model can help us achieve our highest aspirations for financial freedom—both for ourselves and for our country.” Finn K said.

India has always been one of the highest gold consumers in the world. Data from the World Gold Council showed that India's central bank purchased 4.7 tons of gold in February, taking its gold reserves to a record high of 817 tons.

However, Kavita Chacko, head of India research at the World Gold Council, said recent record highs in gold prices could hurt demand for the precious metal in India. "Demand is unlikely to rise significantly in the coming months, even if gold prices are moderate, as the country has upcoming elections (April-June) and the flow of gold and cash will be closely monitored," Chacko said.

India's gold imports expected to drop 90% in March

Gold demand in India usually remains strong in March as jewelers stock up for the Indian wedding season. However, according to sources, India’s gold imports in March are expected to drop by more than 90% month-on-month, reaching the lowest level since the outbreak of the new crown epidemic (when air traffic restrictions restricted imports and blockade measures led to the closure of jewelry stores). Imports in March are expected to be between 10 and 11 tons, compared with 110 tons in February. Government officials said only a negligible amount of gold was cleared after duties were paid this month. Gold imports fell sharply compared to the previous month.

India's reduction in gold imports may limit gains in global gold prices. Lower imports will also help India narrow its trade deficit and support the rupee.

Two Mumbai-based gold dealers said they imported very little gold in March due to weak demand. "Even if the discount exceeds $35 an ounce, jewelers are reluctant to buy. There is no reason to import gold at record high prices and wait for demand to emerge," one of the gold bullion traders said. In India, domestic prices rose to a record high of 66,943 rupees per 10 grams earlier this month. That prompted dealers to offer discounts of about $38 per ounce, the highest since March 2023.

Additionally, jewelers have stopped buying gold from banks as customers are exchanging old jewelery for new ones due to exorbitant prices. Additionally, refineries have all but stopped importing gold bars.

In contrast, the Indian stock market has been one of the fastest-growing stock markets in the Asia-Pacific region. Major institutional investors are optimistic about the Indian stock market, which has hit record highs many times this year.

Article forwarded from: Golden Ten Data

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