What happens when you tell Indians to stop buying gold?

With the government in India recently raising its import tax for gold to 10%, I firmly believe Indians will continue indulging in gold, even if they have to smuggle it in.

We’ll see if Delhi gets its way, especially as gold is approaching its prime seasonal time. I noticed on Business Insider that JPMorgan expressed a similar thought: “Indian demand is quite seasonal related to events and festivals. While some might argue for less Indian buying due to tougher regulations and the weaker rupee making the metal more expensive, the WGC data suggests the opposite."

When I was on Bloomberg Radio and CNBC in August, the anchors were asking me about gold’s movements and if investors should follow the gold buying patterns of George Soros and John Paulson.

These hedge fund managers are making huge short-term bets, which is a very different strategy from what I’ve suggested. I have always advocated holding gold like insurance, with only a 5% to 10% weighting in gold and gold companies, and rebalancing annually.

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About the Author
Frank Holmes

Frank Holmes is CEO and chief investment officer of US Global Investors. This first appeared in his Frank Talk blog. For more updates on global investing from Frank and the rest of the U.S. Global Investors team, follow on Twitter at www.twitter.com/USFunds or like on Facebook at www.facebook.com/USFunds. You can also watch exclusive videos on what research overseas has turned up on the U.S. Global YouTube channel at www.youtube.com/USFunds.

US Global Investors, Inc. is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, headquartered in San Antonio, Texas, manages 13 no-load mutual funds in the U.S. Global Investors fund family, as well as funds for international clients.

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