Impact of Gold on GDP Essay

Impact of aureate on gross domestic product In old-fashi wizd time, India was referred as Golden Bird and In the modern times, She has emerged as the largest consumer ot luckyen in the world. The eventance ot notes can be understood in the saying all glitters are not florid. Gold is an important mutanter in Indian culture, traditions and economic policy. Gold has several applications or uses and the main reasons why Indians take to atomic number 79 are Gold is considered an equivalent for crystalline cash Gold is highly liquid and portable as a Security or Asset.It can be converted to cash anytime when an exigency arises and Is considered a friend In eed. Gold is considered as Status symbolisation E finically in India aureate symbolizes wealthiness. often, funds Is Important consutuent of the bridal wealth In the wedding. Indian weddings without gold are unimaginable. Gold is a real good investment Gold is an plus which has consistently evolutiond in value and thereby considered as a safe and secure Investment. Gold Is considered an effective diversifier which helps to reduce portfolio risk.Gold Is considered as a good introduce item Gold is precious and worthy across all cultures and times. The gold Jewelry Is given as gifts during weddings, festivals and other pecial occasions. Gold has great religious significance Gold is the symbol of the Hindu Goddess Laxmi and considered highly auspicious. Gold is brought or presented on testivals like Dhanteras and Akshaya Tritiya. Toe rings are never do of gold as it represents the goddess of wealth and should not be soiled by touching a humans feet.Great Ornamental pass judgment Women of every age and time have always loved tiring gold ornaments. More everyplace. Gold Ornaments are never out of fashiorn It as well as whitethorn be remembered that Wedding rings are also traditionally make of gold to mark a long asting relationship. Great value as Heirloom Gold jewelry is something which can b e passed down from one times to the other as ancestral property Not besides In India, but In rest of the world also, gold Is also one of the most valuable assets. Like most of the commodities, gold prices are also determined by demand and supply.The global demand for gold has many an(prenominal) layers. For the last 5 years, Jewelry has consisted of of the overall demand for gold. The major players for gold jewelry with over of the demand are China, Turkey, and the Middle East. Gold, as gold coins or bars, adds another 20% of the demand where the united states, India, and Europe play a vital role. Industrial demand lead by japan makes up the last 12%. Mining constitute 59 share of the global gold supply, net official sales constitute 6 percent and recycled gold provides 35 percent ot the global gold supply. except many other factors also play their role In determlnlng the gold prices like dollar prices, crude oil prices, inflation etc. intensify surface today, despite of US D ollar being acceptable in global trade, gold is still considered the safest option. It is because ot this reason gold prices are otten attected by the change in Dollar prices. Anyone who follows the gold and currency markets closely will create that the IJS$ gold price and the Dollar Index mostly trend In opposite directions. I ne reason tnat gold ana tne collar generally trend In opposite alrectlons Is tnat In one respect gold is Just another currency.As a result, when the dollar weakens on the unlike supercede market over an ex unraveled period then the IJS$ gold price will generally rise during the same period and when the dollar strengthens over many onths the IJS$ gold price will usually fall. in that respect are, of course, leads and lags and theres no reason to expect that parting changes in one will be accompanied by equal-and-opposite percentage changes in the other, but when charts of the dollar and gold are compared it quickly becomes apparent that the dickens hav e been inversely correlated.On the contrary, gold prices and crude oil prices tend to rise and fall positively with one another. There are 2 reasons for this- historically, oil purchases were paid for in gold. Even today, a sizable percentage of oil revenue ends up invested in gold. As oil prices rise, oftentimes of the increased revenue is invested as it is surplus to current needs and very much of this surplus is invested in gold or other hard assets. The aid reason is that rising oil prices place upward pressure on inflation. This enhances the appeal of gold because it acts as an inflation dodge.Over the last 50 years or so, gold and oil have generally go together in terms of price, with a positive price coefficient of correlation of over 80 percent. Apart from above factors, gold also provides hedge against inflation and therefore there is a positive relationship amid gold price and inflation. During times of economic growth there is an increase in wealth which leads to higher demand for luxury goods like gold. During times of economic recession, gold can be used as an asset that protects against inflation and devaluing paper currencies.The appropriate Bank of India (RBI) has concluded the purchase of two hundred metric tonnes of gold from the International fiscal Fund (IMF), under the IMFs limited gold sales programme. This was done as part of the Reserve Banks foreign exchange reserves management operations. RBIs conclusiveness to shore up its gold reserves needs to be seen in the ontext of other central banks across the globe increasing their gold reserves. In fact, the share of gold in Indias total reserves has dwindled over the decade. In March 1994, the share of gold in the total reserves of the country was 20. 6% by the end of June 2009, gold constituted only 3. 7% of the total reserves. The purchase resulted in increasing the share of gold in total assets of RBI to 6percent. RBIs foreign currency assets consist mainly of sovereign bonds , mainly US treasuries. So, buying more gold had helped the Indian central bank to diversify its assets. RBIs foreign exchange reserves consist of foreign currency assets, gold, special drawing rights (SDR) which is an international reserve currency floated by International Monetary Fund (IMF) and RBI funds kept with IMF.India is the largest consumer of gold in the world, overpowering around 18 per cent of the total worlds production. India has to import around 70 per cent of its total gold consumption, thus give a lot of foreign exchange to major gold producing countries. With the development of the stock markets, especially on-line trading systems, urban India is lowly unfirm its investment focus from gold to the other avenues of investment such as stocks, bonds, mutual funds etc, but, rural India still has its major investments in the mannequin of gold.Around 65 per cent of the total demand for gold in Inala Is Trom people Involved In agrlculture ana alll around 30 per cent of the GDP of the nation. ea Inaustrles wnlcn contrlDutes to Thus gold is still as important for Indian economic system as it was ever. Gold is also the important source of income for many least(prenominal) developed countries of Africa where countries like Mali, Ghana get majority of foreign exchange from the export of Gold.