Here’s How Gold Is Hurting Our Economy And Why We Should Stop Romanticizing It!

Posted on March 21, 2014 in Business and Economy

By Sukant Khurana:

India is the largest consumer of gold in the world. Not just now but in Athenian councils and Roman senates, a vexing issue used to be the loss of gold coins to India in trade. In fact, now we know that most of gold in both Gupta and Kushana period (that resulted in some Indophiles calling India as the “Golden Bird”) was of Mediterranean origin.

gold

Now that gold is not tied to coinage and currency cost in any way, why is that still today more than 700 kgs of gold is smuggled in India every day? Indians like glitter, bling bling, pomp and well, maybe bit of a safe investment. I am not going to argue against the shine of gold, as I do not think my writing will dissuade those who are goldstruck because of its glitter, but I would like to question the sagacity of gold as a good investment for personal and national economic growth.

First let me ask the smaller question – Is gold all that promising for personal economic growth? Between 2011 to now, there has been a 30% decline in its price and more so in this day and age when there are so many better investment options, then why go for gold? But for the sake of argument, let us say that gold is a safe and good investment for you as a person but here is the big question – Is gold good for the country? Gold or for that matter anything that takes capital out of circulation from the economy is slowing down India’s economic engine. Gold is the kind of investment that does not result in the size of economy to grow. It takes out much needed capital, does not generate jobs and most importantly it does not open new avenues for future growth. We need productive investment back in the society. Gold is simply unpatriotic!

Indians need to explore the Wild West frontiers instead of sitting in the comfort of their homes on piles of gold (well those few of us who have that). The modern equivalent of Wild West frontiers is exploring new ventures in economic and social entrepreneurship. Dynamism instead of the love of glitter put West on the map and is behind the rise of the Dragon in the East. It is time for the elephant of Indian economy to wake up from its sleep, shrug of its heavy golden ornaments and take off.

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