Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

India Monsoon Season Could Make Gold Demand Grow

  by    0   1

Gold just wrapped up a strong quarter, up 13%, and finishing at the highest price level in over eight years. On the year, gold is up about 16% and many mainstream analysts are starting to eyeball record gold prices in the coming months. But there has been some drag on the gold market, particularly sluggish consumer demand in the East – particularly in India.

That could be changing.

India saw 18% more rainfall than average in June as the monsoon covered the entire country nearly two-weeks earlier than usual. This bodes well for India’s economy. As Reuters reported, “Monsoons deliver about 70% of India’s annual rainfall and are the lifeblood of its $2.9 trillion economy, spurring farm output and boosting rural spending on items ranging from gold to cars, motorcycles and refrigerators.”

According to the India Meteorological Department (IMD), soybean, pulses and cotton-growing regions in central and western parts of the country saw 31% more rainfall in June. Rice, coffee, rubber and tea growing regions in southern India received 8% higher rainfall. As of the last week in June, farmers had planted double the hectares planted last year when the monsoon season arrived late. According to Reuters, cotton sowing was up 165%, while rice planting rose by 35% during the period.

An IMD official said India will likely see elevated rainfall in July as well.

Gold has been at record highs in rupees squeezing demand for gold in the world’s second-largest market. Demand plunged to three-year lows in 2019. But a good rainy season and correspondingly strong agriculture output could jumpstart the Indian economy and revive demand for the yellow metal.

Simply put, a good monsoon season is good news for Indian farmers, as well as for the broader Indian economy. And when rural Indians have money in their pockets, they buy gold.

Collectively, Indian households own an estimated 25,000 tons of gold. The yellow metal is interwoven into the country’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system.

Gold is not just a luxury in India. Even poor people buy gold in the Asian nation. According to an ICE 360 survey in 2018, one in every two households in India purchased gold within the last five years. Overall, 87% of households in the country own some amount of the yellow metal. Even households at the lowest income levels in India own some gold. According to the survey, more than 75% of families in the bottom 10% had managed to buy gold.

Gold is the lifeblood of the Indian economy. Even now, it is serving as a valuable source of liquidity during the country’s credit crunch.

A boost in Indian gold demand could be even further upward pressure on gold prices, even as central bank monetary policy drives the yellow metal higher.

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Janet Yellen’s Flip-Flop and What She’s Really Telling Us

Treasury Secretary Janet Yellen sent markets into a tizzy on Tuesday when she said interest rates may have to rise to keep the economy from overheating with all the government stimulus. But later in the day, she walked those comments back, claiming inflation isn’t going to be a problem and insisting that she wasn’t suggesting […]

READ MORE →

Jerome Powell: Same Old Song and Dance

The Federal Reserve wrapped up its April meeting yesterday. Again, there were no changes in actual policy, leaving everybody to try to parse out meaning from the FOMC’s statement and Jerome Powell’s post-meeting press conference. When you boil it all down, it was pretty much the same song and dance from  Federal Reserve Chairman Jerome […]

READ MORE →

Jerome Powell Admits Federal Budget “Unsustainable” But Assumes We Can Fix It Later

Through the first six months of fiscal 2021, the US government ran a record $1.7 trillion budget deficit. Federal Reserve Chairman Jerome Powell said this is sustainable – for now. During a webinar sponsored by the Economic Club of Washington DC, Powell said the economy can handle the current debt load. But he did warn […]

READ MORE →

The Mainstream Is Wrong About Rising Bond Yields and Gold

Prices are going up. The Federal Reserve is printing money at an unprecedented rate. The US government continues to borrow and spend at a torrid pace. As Peter Schiff put it in a recent podcast, we’re adrift in a sea of inflation. Gold is supposed to be an inflation hedge. So, why isn’t the price […]

READ MORE →

What’s In This Stimulus Bill 3.0? And Who’s Going to Pay for It?

On Wednesday, the House gave final approval to coronavirus stimulus bill 3.0. For those keeping score at home, that brings total stimulus spending approved during the pandemic to $5 trillion. So, what exactly is all of this money going to be spent on? And who is going to pay for it?

READ MORE →

Comments are closed.

Call Now