In gold's own country -- Kerala, India


By T.P. Sreenivasan
The New York Times
Monday, December 24, 2012

KERALA, India -- Lord Padmanabha, the presiding deity of Thiruvananthapuram, also known as Trivandrum, the capital of Kerala, who is depicted as reclining on a gigantic snake, Anantha, suddenly went up in the estimation of his devotees recently, when it was discovered that he has an inestimable treasure of gold in his custody.

Kerala values nothing more than gold, and it is comforting for the people of the state to know that their erstwhile rulers too had a fascination for the yellow metal, which they stored in the temple as an offering and as an insurance against famine. The innumerable jewelry shops around the temple and elsewhere in Kerala may be handling as much gold as the temple has accumulated. "God's Own Country" is fast becoming "Gold's Own Country."

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When Deutschebank calls gold "good money" and paper "bad money". ...

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When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...

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With only 3 percent of India’s population, Kerala gobbles up 20 percent of the country's gold every year, and the World Gold Council estimates that India, the largest consumer of gold in the world, consumes 30 percent of the global supply. Two hundred thousand people are employed in the gold industry in this tiny state. Such is the love of gold in Kerala that there may be no household without some gold, tucked away as savings, either to be given away as wedding gifts for daughters or to raise cash by way of gold loans or outright sale.

Buying ornaments and investing in gold is an old tradition, but the proliferation of jewelry stores doing brisk business in gold, diamonds and platinum is a recent phenomenon in Kerala, coinciding with the rise in remittances from the Gulf. While Indian migrants to the west keep their money in the Swiss banks and other destinations, the Indians in the Gulf send their money back home either to purchase land in their villages or to buy gold for their women or simply as investment.

When the gold prices were favorable in the Gulf, they brought gold there, and many Kerala-based shops sprang up in the Gulf. Now that the international prices are the same, gold shops have come up in every city in Kerala. In small towns in Kerala, the most dazzling buildings are either jewelry stores or silk houses or combined "wedding palaces." Fashionable eating places or supermarkets are extremely rare even in prosperous towns.

Most film stars of repute are either partners or "goodwill ambassadors" of these enterprises and appear on billboards or television commercials. One of them, Mohanlal, who has interests in different aspects of the gold business, advocates buying gold in various TV commercials throughout the day. He enticingly asks what his fans are doing in the evening and asserts that he cannot celebrate anything without them. He makes it appear as though gold makes the world go round.

If you want to see gold at its most ostentatious, go to a wedding. At these events, when it comes to the precious metal, the rule is the more, the merrier. Many brides are covered in gold ornaments from the neck to the knee, not to speak of the weight placed on their heads. They resemble temple elephants, which are decked from top to bottom with golden decorations during festivals.

Since gold ornaments are highly desirable and they only increase in value, all available money is spent on them with no concern. Beg or borrow, the brides must be decked in gold. They are literally worth their weight in gold. The poorer the people, the greater is the desire to show off their wealth in gold.

As the lust for gold skyrockets, the demand for imitation gold jewelry has also grown by leaps and bounds. Outside Lord Padmanabha's temple gates, as tall as the Joyalukkas jewelry retailer's building, is Kollam Supreme, a jeweler that freely displays intricate gold ornaments, with no care for security. The secret is that these are just gold-plated ornaments that look like the real thing, with just a gram of real gold used in each of them.

Kollam Supreme is such a well-known brand that it is hardly necessary to say anywhere that these are gold plated. The Kollam brides look as impressive as their richer counterparts at a fraction of the cost. This new brand of ornaments satisfies the intense desire of ordinary people look as affluent as their rich neighbors.

Kerala is littered with small financial institutions that lend money instantly against gold deposits. Muthoot, one of the largest of these lenders, prides itself in completing a transaction within three minutes, and its branches can be seen on every corner in Kerala.

The same family has competing businesses, with each brother advertising in a different color, red being the most prominent of them. The owner of the red Muthoot was featured on the cover of Forbes magazine for running a big business empire in India based on gold loans. Hundreds of his branches are small establishments, with a simple, but elegant, counter in front and a big, fortified room behind.

Those who have feared a crash in gold prices have been proved wrong, as prices are escalating every day, even more than fuel prices. Those who have stocks of gold are overjoyed, and people buy up even at phenomenal prices in the expectation of even higher returns. Soaring prices of any commodity should normally cause concern and raise a hue and cry. But Keralites continue to buy gold in the full confidence that gold prices will never fall.

It's not as if Keralites don’t have other avenues for investment. Land is another hot commodity that brings in steady profits. But land transactions are fairly transparent, land registration is cumbersome and expensive, and land holdings are hard to hide. Land transactions also require sound judgment as there is an element of speculation in them. For these reasons, when it comes to their money, Keralites are putting their faith in gold.


Mr. Sreenivasan, a former Indian diplomat, is the executive vice chairman of the Kerala State Higher Education Council. His views are personal and do not reflect the policy of his state.

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