The Great Gold Love Trade Is Alive And Well, As India Buys A Record Amount
The great gold Love Trade appears to be alive and well, despite gold having a down year in 2021. India, the second largest consumer of the yellow metal after China, reported spending a record $55.7 billion on gold imports last year. That’s more than double the amount from 2020 and surpasses the previous record high of $53.9 billion, set in 2011.
In volume terms, the South Asian country imported 1,050 tonnes of gold in 2021, the most in a decade, according to reporting by Reuters.
As many of you are well aware, gold has long been an incredibly important metal, both culturally and economically, to India and its people. It’s considered auspicious to give gifts of gold coins and jewelry during certain holidays and weddings, and according to some estimates, Indian women own more gold than all the bullion combined in Fort Knox.
That gold imports were so high in 2021 is a good sign for global demand. For one, it suggests that couples who had to postpone weddings on account of Covid lockdowns now feel confident enough to move forward with their plans.
And two, it shows that the middle consumer class in India is cash-rich enough to absorb higher gold prices. The average annual price of the metal in 2021 was just under $1,800 per ounce, the highest it’s ever been.
In fact, if you look at its price going back to 2000, gold has been up 86% of the time on an average annual basis.
Positive Far More Often Than Negative
Some gold bears may have the perception that the precious metal’s price is always struggling, but that couldn’t be further from the truth.