My reputation with my wife as a decent reader of financial tea leaves is in the mud these days. Every time she looks at the morning newspapers, after glancing at the day’s offering of disasters and health scares, she turns to the price of gold and that’s when my discomfiture starts.
It all began a few years ago when our daughter got into college and my wife declared: She’s growing up and it is high time we bought a bit of gold for her. What for, I asked, adding, I don’t see her generation appearing bedecked in gold on social occasions.
Even if we spent all we have on gold for her, it will barely cover a few inches, the wife snorted back. All we can do is set aside for her a little something which will be of permanent value. I didn’t want to get into a discussion with her on the long-term future of gold as a store of value, so I tried a more short-term argument.
Look, I said, gold is already on a high, and see the future in stocks. They will zoom, gold won’t. If you are keen on creating value for her, let’s buy stocks and then when they are real high we can sell them and buy gold which will have fallen behind stocks in price rise by then.
And lo and behold, that did happen. Stocks zoomed but then came something called the Great Recession and stocks bit the dust, making me do the same. In the Great Uncertainty, everyone ran and took cover in gold. When I saw the look in my wife’s eyes, I reasoned: You cannot blame me for failure to predict what happens once in 70 years; the last time this occurred (the Great Depression) was in the thirties. Hold your calm, as all good investors do; stocks will rise again, the morning will come, gold will fall behind and then you can buy some.
It is in the last couple of weeks that life has become truly unbearable. Stocks are up again but gold is simply racing ahead and I am harangued by the wife every morning that if only she had not listened to me we, as a family, would have been so much better off. All I have been able to say is that gold does have peculiarities but it cannot go on rising in this manner forever. It will be absurd to buy now when prices are surely hitting the peak.
The role model for my wife are her colleagues in office. As good middle-class south Indian women, they have been steadily buying minuscule bits of gold on auspicious occasions, year in and year out, and they seem to be far better off for not having read economics in college and spent a lifetime in business journalism like me.
My inability to read the market has made me admit to myself that my opposition to gold is part scientific, part ideological and even part patriotic. That’s quite something considering that I have not read pure science, see myself to be more pragmatic than anything else and will be one of the last to wave the flag for wrong reasons.
Putting scarce national resources in an unproductive asset like gold is such a waste, particularly in a poor country like ours. And more so when the demand for dowry and gold has been the cause of so much of social misery in our cultural history.
My aversion towards gold and the belief that some day, when Indian society becomes modern, women themselves will not see much intrinsic value in gold and consider it distinctly out of fashion have actually been vindicated. On being harangued by the wife on buying gold as a matter of duty towards our daughter, I have tried a clever stratagem: Why not ask her what she wants?
And she has not let me down. She would rather buy some new clothes and shoes and if we insisted, what she would really like is a wee bit of diamond set in a bit of white gold! And if that’s beyond our means, then not to worry, and if we insisted on buying some gold in her name and that made us happy, then that too was OK by her. The indifference, not caring for the matter either way, was so different from my vehemence.
Even as I have rued my bad luck with gold, the only solace that I have had is from the life of a truly outstanding Indian. I G Patel, the great economist and administrator of the last century, whose life story I am currently researching, had this long run with gold. He disliked the metal, having seen from a young age the social havoc that dowry and gold wreaked.
So, when the government passed the gold control order after the 1962 war with the Chinese, he was all for it, and when goldsmiths protested and he, as part of a government committee, looked into the matter, the consensus view was that the policy should be left essentially undisturbed. Then he went on leave and the finance minister, T T Krishnamachari, had the committee’s conclusion critically modified. IG was furious and left the government to teach at the Delhi School of Economics.
“There is ample historical evidence that gold has seldom been a good investment over the long run,” IG said. I have repeated that to my wife. What I have not told her is what Keynes said: In the long run, we are all dead!
