The fall and the rise of gold prices, over the last 15 days or so, is the raging talk among all the people (a total of three) not watching the IPL
So this week we thought we will tackle this interesting and alluring subject, as we have plenty of expertise in this field, no doubt acquired through the countless hours we have put in in front of TV watching the never-ending stream of commercials for gold jewellery.
This piece has been structured in a Q & A format to help you glean historical truths in a quick and non-fussy manner. This we have pulled off by the trusted journalistic method of not including even a single fact.
Can you give a historical perspective on the popularity of gold?
All history books mostly agree that ‘gold has been an object of fascination for humans since time immemorial’. This makes it more than abundantly clear that historians have no clue as to since when gold became popular among humans and are just making up things vaguely.
On the contrary, as a professional journalist with established contacts in the gold industry, I can tell you that gold became popular from November 16, AD 97, the day Bappi Lahiri was born in one of his previous births. (I will honestly concede that there is some doubt over the above date and some sources feel that it could be November 15, AD 97)
Whichever date it may be, the fact is gold has held sway over mankind in a manner that is both shocking and wondrous. Civilizations have been ravaged, countries have gone to war and people have been killed all for the sake of gold. Of course, wars have been fought over football match results, too. Basically, people have it in them to go to wars for any damn reason.
Anyway, ancient Greeks were the first to see the real worth of this metal and it was them who named it ‘gold’ because it was, as Aristotle later memorably put it, ‘gold in colour’.
There is also a school of thought that says that the word ‘gold’ has its origins in the Latin description aurum, which literally means: ‘please name this ‘gold’ in English’.
Isn’t the tale of Midas a cautionary one to all those who are crazy about gold?
Indeed the saga of King Midas provides a sobering thought about how one man’s blind obsession can end up in a monumental tragedy for generations of school students who are forced to read the boring story in their non-detail books.
Midas, with his mind overcome with avarice, sought the power to turn anything that he touched into gold. As it happened, he touched his son (who turned into gold) and it was then that the biggest truth of life dawned on him: Yes, there was no use in anything being just gold. It had to be made into jewellery to be of practical value.
Before the invention of paper money were gold coins used as currency?
Yup. According to the Encyclopaedia (See under: Facts That People Have No Need For) gold coins were indeed used to buy everything, including — not surprisingly —- gold coins. During moments of financial distress, people went and pawned the gold coins they had bought and got themselves some gold coins in return to tide over their crisis.
But over a period of time some of them probably felt there was some crinkle in this monetary set-up. ‘What is the point in pawning gold and getting gold itself in return’ some economics-brained individual must have asked. So in came the system wherein you gave costly gold to the bank/pawnshop which in turn gave you a piece of paper. Most of modern economy is predicated on this essential logic.
How to find out that the gold jewel one is buying is pure or not?
This is a tricky one. For, jewellery shops have many things in common. The main thing of commonness, of course, being: All of them unfailingly come up with cringe-worthy commercials.
But irrespective of where you buy, you would do well to adhere to this simple rule: Gold jewels are valuable and pure only if —- this should be obvious even to a kindergarten student — it is full of cadmium.
Some of you may be wondering what this cadmium is. Well, cadmium is a unique metal that when it fuses with gold, due to a strong chemical reaction, its spelling becomes kadium. But jewellers don’t bother to use even this wrong spelling, instead they prefer a further diluted KDM, and actually end up putting up a ‘916 KDM’ on jewels, with ‘916’ apparently being the distance in kilometre from its original spelling.
The other thing about cadmium, which is used to solder gold jewels, is that it releases harmful, and often life-threatening, toxic fumes when melted. So a quick test to figure out whether pure cadmium has been used in your jewels or not will be to check whether the goldsmith died while making it. In other words, if you are keen on buying pure jewels —- please write this down —- you should never buy them from a jeweller who is alive.
What are the factors that impact gold prices?
Not just gold, trading in all metals, commodities and stocks has to factor in three points: 1) Demand 2) Supply 3) Randomness.
Experts, however, point out that for all practical purposes you can simply ignore the first two points and use the last one, which is at the core of all market activity in this universe. Take the stock markets for instance, they are impacted by weather patterns. The only thing more random and unpredictable than global weather is, well, Sreesanth.
Last week, gold prices fell. This week they have gone up. Even though the conditions have not changed, what has brought about this fluctuation?
No doubt about it. Duckworth and Lewis formula has been at play here.
Finally, aren’t women more enamoured of gold than men are?
This is a classic stereotype endlessly peddled over centuries and centuries and centuries by cynical men. Like all stereotypes this one, too, is very true.