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Author Topic: Don’t Forget about China’s Little Brother  (Read 125 times)
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tamo42
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« on: 2011 Jun 21, 05:39:26 AM »



I’ve been meaning to write this post for a while, but the latest news has spurred me to actually do it. Amidst all the talk about China, both here on Live Business Chat and elsewhere, the other Asian super-growth story is often forgotten: India.

India is not quite as large population-wise as China, but it is huge. The latest estimate is that some 1,155,347,700 live in India, about 200 million behind China as of 2009 figures, but India is forecast to overtake China’s population by 2030. This is in large part due to China’s one-child policy.

Like the Chinese, the Indian people are losing confidence in the modern finance and banking systems and are returning to their traditional stores of wealth. And can you blame them? We have seen flash crashes take out stock markets around the world. Yes, this is still happening in the US as well. The Indians have seen their currency, the rupee, become devalued against gold dramatically even though the rupee has fared relatively well against other currencies. Over the past 6 years, the rupee cost of an ounce of gold has gone from 20,000 to almost 70,000 – and it has been pretty much a straight line.



So what is the news that has prompted me to write this piece? Gold imports for the month of May are 5 times what they were for April and twice as much as last May. Mineweb has the story.

India has a lot of things going for it. It has strong ties to the English speaking, industrialized world. It has a highly educated population. It has a culture that traditionally values precious metals, especially gold. Its central bank has been a public buyer of gold.

It also has drawbacks. Corruption in the Indian government is legendary. The quasi-socialist central planning schemes are only very slowly being taken apart. Tensions with Pakistan continue, and tensions with China for regional dominance are rising.

On the whole, it is a very good sign that the Indians are recognizing the theft of their wealth through inflation. When a people take steps to protect themselves, they come out on the other side of troubled times in strong positions. They will have the resources with which to buy the things they need no matter what happens to fiat currencies in the mean-time.

So don’t forget about India!
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Neal McSpadden
Honest Silver and Gold, LP - Earn 3% a Month By Turning Silver and Gold into Cash Flow
The Primal Prepper - my blog about preparing for the worst while living the best
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« Reply #1 on: 2011 Jun 21, 10:39:06 AM »

I discount India somewhat because of their strict, oppressive cultural traditions that are still in place. They have the overall effect of impoverishing the country. So, although India is improving, I think they will always be second to China in the foreseeable future.

Also, as you mentioned, the corruption is huge - much larger than China.

But, India's buying is moving the markets, so India still matters a whole lot.

I also think India's government and society is more stable than China's, despite its flaws. While China may be prone to an affinity for dramatic rises and falls of  dictators, emperors, chairmen, etc, India seems to me to be relatively more stable over the long term, which could add up to an overall advantage, despite their short term disadvantages.

It will be interesting to see.
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« Reply #2 on: 2011 Jun 21, 01:15:55 PM »

always interesting to investigate new markets, do you have any particular coins on mind??
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tamo42
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« Reply #3 on: 2011 Jun 21, 01:52:40 PM »

I know nothing about Indian coins. I was talking from a wider global investment perspective.
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Neal McSpadden
Honest Silver and Gold, LP - Earn 3% a Month By Turning Silver and Gold into Cash Flow
The Primal Prepper - my blog about preparing for the worst while living the best
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