Indians, like the Chinese, have an insatiable appetite for gold. They may hoard additional quantities of it when the stock market is in the doldrums, but do not liquidate holdings even in the fiercest bull-run. The average Indian wedding turns the occasion in to a kind of Fort Knox, with the yellow metal in evidence everywhere, especially on women!
The Indian stock market has been witness to a new kind of gold rush in recent times. Only this time, it is more about mining than about jewelry. The sub-continent is so richly endowed in natural resources that abundant reserves under the surface of the earth should surprise no stock market observer. However, old technology, unproductive labor, and confusing regulations have been seemingly insurmountable obstacles in the way of abundant production from the few working mines of the country’s socialist past.
A young Minister in charge of trade and commerce, eager to do deals with stock market quarters has put paid to past inertia in gold mining in India. International companies are delighted to find that they are, all of a sudden, not just welcome to prospect and to produce gold in India, but are actively courted in this respect as well.
Listing a joint venture with a domestic entity on the local stock market is the smoothest route to entry in to the bureaucratic maze of Indian corridors of power. The local partner takes care of all the nuances of doing business in the country, while the stock market is certain to give every proposal involving gold a most enthusiastic response. The situation fits global companies with mature reserves elsewhere, like the proverbial glove.
It is surprising but true, that India, which consumes 700 tons of gold in a good year, produces less than 7! What greater assurance could a stock market investor want than this oceanic gap between demand and supply? There are some environmental groups that worry about scarce resource consumption, particularly with respect to water, but international players can look forward to support from administrators to keep marginal protestors at bay.
