The Golden Manipulation

India today celebrated the “gold festival” – the so called “Akshaya Tritiya”, where it is considered to be auspicious to buy or gift gold to friends and family. And I remembered a conversation I had with my mother last year. I asked her at that time when did she first come to know about this festival? She told me a story that around 15 years ago, one day she and a friend of hers went to a jewelry-shop in town to purchase some silver-based ornaments for the friend. And suddenly the staff in the jewelry shop recommended her and her friend to buy some gold as well as it was Akshaya Tritiya. My mom and her friend went – “What? What’s Akshaya Tritiya?” The staff explained. My mom and her friend weren’t sure if what the store-staff said even made sense. They returned home. Some jealous neighbors who had come to know what that day was about thought that my mom was out to the store to buy gold and thereby to buy “luck”. So they rushed to the store to buy some gold (my guess is they would have bought one or two gold coins). And so spread the word to a few in our street.

Fifteen years later, the entire town rushes to the local jewelry shops to purchase gold today. There are literally lines waiting outside the shop to enter. In my view, this is a classic example of manipulating consumers by a mix of religion, culture, sentiments, myth and superstition.

Now, gold mining in India has died a long time ago. Almost all gold in the country is imported. And if one has read any gold related news in the past month or so, the constant news was that this festival was calculated as a factor to support gold prices worldwide. India is the largest gold importer in the world and consumes, by some estimates, close to one-third of all gold produced globally.

In March alone, reports indicate that India imported 125 tons of gold – now in dollar terms that is around $4.8 billion. India’s trade deficit in a year stands around $200 billion. And gold imports make roughly 10% of that deficit.

When I was starting to think how the world’s gold industry has manipulated the Indian consumers by leveraging their weakness, I remembered something else my mom had said – that some jewelry shops are now promoting Akshaya Tritiya as a 3-day festival. And I know that it is not just the world’s gold industry, but the Indian jewelry industry too.