India's greedy government on Gold. (Bullish for silver?)

I'm very pro-gold, but I don't see this as a totally bad move. The traders and jewellers made good points, but I'd be concerned about gold racing bubble proportions in India. Most other countries have such low ownership levels that a mania is less of an issue. But when gold is owned by so many, a ' prices are rising' bubble could form.

Consider property ownership in Australia as an example.

I haven't accounted for arbitrage opportunities that might prevent such a bubble though, but I can see the Govt's concern as it significantly undermines their ability to control the economy.

I'm sure most would disagree with me though.
 
Dogmatix said:
I'm very pro-gold, but I don't see this as a totally bad move. The traders and jewellers made good points, but I'd be concerned about gold racing bubble proportions in India. Most other countries have such low ownership levels that a mania is less of an issue. But when gold is owned by so many, a ' prices are rising' bubble could form.

Consider property ownership in Australia as an example.

I haven't accounted for arbitrage opportunities that might prevent such a bubble though, but I can see the Govt's concern as it significantly undermines their ability to control the economy.

I'm sure most would disagree with me though.
Click to expand...

Well thought out post - especially for a small Gaulish dog.
 
government controlling the economy? Now's there's a strange idea!

Do you know what happens to a machine that has an active feedback system and something outside the system starts chucking in random stuff? It goes haywire. Ask any engineer.

Government is a load on the system, slowing it. I suppose that's a form of control - if you want the system to stop.

Like all government everywhere, the Indian government sees a pool of money and wants some of it - as much as they can take without the host dying. The tax on gold started as a flat charge. Earlier this year the flat charge became a percentage. Now the percentage is doubled. Looks like the growth pattern of a parasite to me!!!
 
SilverPhoenix said:
Like all government everywhere, the Indian government sees a pool of money and wants some of it - as much as they can take without the host dying. The tax on gold started as a flat charge. Earlier this year the flat charge became a percentage. Now the percentage is doubled. Looks like the growth pattern of a parasite to me!!!
Click to expand...

yup, looks like the Indian Gov has implemented 'Operation Greed'
 
Interesting to note that the tax on imported dore from mines is only 2% whereas imports of bars is 4% - they are looking to favour their local refining industry.
 
SilverPhoenix said:
government controlling the economy? Now's there's a strange idea!

Do you know what happens to a machine that has an active feedback system and something outside the system starts chucking in random stuff? It goes haywire. Ask any engineer.

Government is a load on the system, slowing it. I suppose that's a form of control - if you want the system to stop.

Like all government everywhere, the Indian government sees a pool of money and wants some of it - as much as they can take without the host dying. The tax on gold started as a flat charge. Earlier this year the flat charge became a percentage. Now the percentage is doubled. Looks like the growth pattern of a parasite to me!!!
Click to expand...

I don't disagree, but given the the current problems the Indian Govt faces, their current economic situation and their ability to manage problems within such an environment, I personally don't see it as such a bad choice.

A tax on gold in Australia would annoy me no-end, but we're in a different situation altogether.

I try to take the perspective beyond the individual - ie, what is good for one or many individuals is not necessarily good for all. Eg, first home owners grant ;) (to drag it back to an annoying local example)
 
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