By Deepak Rangan, Commodity Online
Gold and Silver prices at the MCX for the first half of 2011 has moved in absolute co-relation to international market, showing clearly that Gold and silver prices are affected fully by global developments. The daily charts of the metals highlight the concept of one world, one economy, and the idea that every economy is linked and dependent on every other economy.
Gold is primarily an asset class, a store of value. Investors stock on gold when economies are unstable as is the case today. The money flows from riskier assets such as stocks, real estate and government bonds and into the metal.
According to 2010 data, Indian share in global Gold consumption was 36%. Considering that over 99% of the gold has been imported, India has to pay the international rate for its imported gold. Therefore, it should not come as a surprise that both the charts look absolutely similar.
And as Silver is gaining as a popular asset class, with India depending hugely on imports for meeting its demand, the domestic trend is without a doubt influenced by global cues.
