Gold Prices: Why Are Indians Paying Extra?

Along with yesterday’s news of increasing Indian gold sales, today shows another healthy sign.  Commerzbank reports Indians are now willing to pay a slight premium for their retail gold, raising overall gold prices in the country. 

The way this works is pretty straightforward: Any time a gold buyer is willing to pay more than the London spot price, widely held to be the price for gold on international markets, it’s called a premium.  It’s a premium because they could theoretically go somewhere else and buy it at the market price, rather than pay the “additional” premium.  So there must be additional value there, by all economic logic.  This isn’t completely unheard of; we covered such activity on the Shanghai Gold Exchange (SGE) last November. What it indicates is that there is indeed demand for gold in India, despite the new tax structure and money laundering regulations.

While it probably won’t drive gold prices up by itself, this does indicate support for gold hasn’t fallen away in India.  You can read more about the report in today’s featured article.

Related: Could This Holiday Be Driving Indian Gold Sales? 

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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