The Indian gold investor still has one weakness -his understanding of the Rupee itself in pricing gold. As we are all guilty of, the Indian investor measures the price of gold in the Rupee and rarely measures the price of the Rupee in terms of gold. Consequently as the Rupee weakens, he sees the price of gold rising, when it is not.


This is fooling the present Indian market into believing the gold price is 'spiking', whereas in the dollar it's 16.5% off its high! Until Indians understand the function of the Rupee in pricing, they'll be fooled by it.

Indians will likely catch on eventually as investment demand becomes more influential than cultural demand and it increasingly becomes apparent that a temporarily high or low gold price in any particular currency doesn't change the long-term favorable picture.

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