Bombay's Street of Dreams

Buying Gold in India isn't quite like Buying Gold in the US or Europe...

WE WENT to Bombay's street of dreams yesterday, writes Bill Bonner in his Daily Reckoning. It looked to us as though it was more of a street of nightmares.

The street was torn up. It smelled of sewage and industrial waste. We looked up and down for the office of a fellow who is one of Bombay's leading authorities on the gold trade.

When we finally found him, we had to go through a dirty doorway, past a shop where people were sitting on the concrete floor stuffing mattresses with wool, up an elevator last inspected by the British in 1946...and finally to a tiny little office at the back of the building.

"You have to understand," said the slim man with a bandaged foot, "the gold trade here in India is very different than anywhere else. People use gold for household finance. When they need cash, they sell their gold. When they want to save money, they Buy Gold. And they are required to Buy Gold for various special occasions too. Weddings, festivals...there are plenty of holidays in India...and each one is an occasion for buying gold. One holiday calls for buying arm bracelets. Another for buying bangles. Rings...necklaces... every bit of jewelry is also a sign of status...and family savings..."

We went back onto the street, and made our way past porters, shoppers, loiterers, sleepers...over to the jewelry shops themselves. They say the population of India is 1.2 billion people. It seemed like more than that in a three-block area...

There is a guard at the entrance to the shop. He waves a wand around our bodies, trying to detect metal or karma, then gestures for us to proceed. In the shop, there are dozens of sari-wrapped women studying the glass display cabinets. Behind them are other sari-wrapped saleswomen, answering questions...

"How much is this?" We saw something that might make a nice birthday present or wall display. It was a large, splendidly gaudy necklace of finely-worked gold.

"That's 4 lakh."

"Four what?"

"Well, a lakh means times 100."

"So, it's 400 rupees?"

"No, it's 400,000 rupees."

"So a lakh means 100,000?"

"No...wait...I read the price wrong. It's only a fifth of a crore, so it's more like 2 lakhs."

"What's a crore?"

"It means you multiply by another 100."

"Oh..."

"So, this is 0.2 crore, or 2 lakhs, or 200,000 rupees...?"

"Yes, that's it."

"And how much is that in dollars?"

"I don't know...we only accept Indian currency."

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