Asian Traditions in Gold

Stashing gold at home rather than having cash in the bank is a generations-old habit in Asian habit but a recent surge in prices has sparked government attempts to bring the yellow metal to heel.

Last year the Vietnam bought more gold per capita than India or China, according to the World Gold Council, and domestic prices soared by 18 percent — far outstripping the global market’s 11 percent increase.

The demand in many Asian countries have the price sometime as much as 100.00 more per ounce then on the open markets.

“I still like to keep my savings in gold. It’s safe for retired people like me. I can sell the gold anytime, anywhere, when I need cash,” said an Indian gentleman

Although the treasure has long been perceived as a safe haven, the recent gold rush has alarmed many  smaller governments, which are faced with high inflation rate and an unstable national currencies.

Officials are trying to dampen the gold fever by bringing the trade back into their hands, almost two decades after they formally legalized the already-common practice of private gold ownership and trading.

An array of financial measures initiated last summer include some countries moving gold under the control of the central bank. India increased import duties by 2%

Limiting widespread street-level trading of gold will, the official line goes, reduce price volatility and prevent retail investors from pouring into the precious metal, which undermines the already-shaky currencies.

To this end, officials are also considering  measures which could force thousands of  jewelry shops to get out of the bullion business and focus strictly on jewelry instead.

For practical reasons, many Asians prefer to keep their savings in gold, saying the maximum interest rates offered by banks for deposits fall well short of last year’s cost-of-living rise.

Recent slumps in the real estate and stock markets have further heightened the gold rush, economists say.

Asia’s  love of the yellow metal is centuries-old, rooted in a history of strife, warfare and want. Empires may fall, currencies may change… gold will always survive.

Restricting the gold trade dovetails with an ongoing national campaign to encourage consumers to bank their gold, reversing the practice of keeping it at home.

Details of the plan are not yet public, but bankers say government is considering ways to lure savers by offering better returns and security.

It is difficult to change 1000’s of year old traditions, buried deep in culture and heritage. Similar to westerns who stored cash in their mattresses. Old traditions die hard and slow.

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