Read Book Online : http://www.archive.org/stream/goldtreasureofin00dani#page/n5/mode/2up

Download pdf Book : http://ia700308.us.archive.org/11/items/goldtreasureofin00dani/goldtreasureofin00dani.pdf

I think it is a repeat post. Is it? India undoubtedly the traders' paradise. There are no known gold mines in India of any significant value. Yet where did all that gold come from? There is no doubt in my mind that the gold stocks in India represents the trade surplus of this subcontinent generated over centuries. Let me illustrate this point through the strange example of gold smuggling n India. During the era of Gold control (which made holding and processing gold without a proper license illegal. During this period, hge quantities of gold (estimated at some 400 tons per year) were smuggled into the country. Smuggling of gold (importing gold from outside through illegal channels) was the mainstay of all illegal trade (with electronic goods, cosmetics, cigarettes being junior components). Given this fact one has to answer the simple question: How did the overseas sellers of gold got the payment for what they sent into India? Obviously they did not send it free. They also got a premium to cover for loss of gold. Gold losses were significant due to (i) confiscation by India customs and (ii) Hazards of the difficult smuggling routes and pilferage. Not only were the sellers of gold were to be paid, they were to be paid in Dollars. These dollars had to come from somewhere. It does not require much guesswork to conculde that these dollars had t come from an invisible trade surplus. It is also a known fact that India till recent years was never an exporter of services (invisible). So what was the source f the invisible trade surplus? It came from the sleight of hand. Most, if not one and all people engaged in the formal import/export trade and industry, engaged in what is known as under-invoicing of export and over-invoicing of import. So it had to come from underlying trade as it used to come for centuries in the past. It is not surprising that India has a dearth of refiners but a plethora of artisans. The reason is we got our gold always in ready, pure (London-good as they call it) delivery. So how come a poor country over centuries has actually been running trade surpluses? These trade surpluses are accumulated in the hands of people in the form of gold trinkets and jewelery they hold. India s now getting into a different league of trading nations when it has begun to manufactre and export services (mainly IT related) besides the goods we export. The only major thing we do not have as of today is the ability to make and export capital goods which is the preserve of Europe, America and Japan. The west was always hungry for gold because they needed it to pay for the worldly goods it's people consumed. hey also invented the gold-standard for their paper currency to keep the trade-surplus producing nations at bay. Today our trade surplus is resting mainly in the US Treasury in the form of IOUs written by the American Government. Someof the surplus is also in the form of IOUs written by our former rulers. The book has some very interesting statistics.

Thank you Shekar for your interesting perspectives !

Interesting perspective, Shekhar. I am convinced that India (South Asia), with 800,000 square miles of rich agricultural land, has historially collected the world's gold by providing the rest with agri products (spices, cloth, food). The defeat of China in the Opium war (1845) had settled England's Balance of Payment problems that resulted from with India (spices, cotton) and China (silk). The huge finds of gold in the late 1840s in Australia and California changed the landscape of money economics, as global gold production went from 75 tons in 1847 to 300 tons in 1860 and 700 tons per year by 1920. Until the 1990s India consumed a third of global production; it has fallen to about 20% of 2600 tons produced in 2009. While the capitalist system used gold, interest and leverage as financial innovations in increasing the counting vocabulary from "millions" in the 1800s, "billions" in 20th century, to "trillion dollar economies" in 2010: http://tinyurl.com/lustre-of-gold

!Qamar Rehmani: Thanks indeed. What is the source of this data? World Gold Council?

Shekar : Double 'like' !

Shekar : I am surprised to learn from your comment that India has not been a Gold producing country....goes quite againt the general beleif. What about the gold mined from Kolar Gold Mines ?

History of gold mining : Gold was first mined in the Kolar Gold Fields(KGF) area prior to the 2nd and 3rd century AD (golden objects found in Harappa and Mohenjo-daro have been traced to KGF through impurities-analyis—the impurities include 11% silver concentration, found only in KGF ore) by the digging of small pits. During the Chola period in the 9th and 10th century AD the scale of the operation grew.[citation needed] The tradition of mining gold started at least as early as the first millennium B C. The Champion reef at the Kolar gold fields was mined to a depth of 50 m during the Gupta period in the fifth century A.D. The metal continued to be mined by the eleventh century kings of South India, the Vijayanagar Empire from 1336 to 1560 and later by Tipu Sultan, the king of Mysore state and the British. It is estimated that the total gold production in Karnataka to date is 1000 tons.[citation needed] Romans used hydraulic mining methods on a large scale to extract gold from extensive alluvial deposits, such as those at Las Medulas. Mining was under the control of the state but the mines may have been leased to civilian contractors some time later. The gold served as the primary medium of exchange within the empire, and was an important motive in the Roman invasion of Britain by Claudius in the first century AD, although there is only one known Roman gold mine at Dolaucothi in west Wales. Gold was a prime motivation for the campaign in Dacia when the Romans invaded Transylvania in what is now modern Romania in the second century AD. The legions were led by the emperor Trajan, and their exploits are shown on the grand column in City Hall.[2] Under the Eastern Roman Empire Emperor Justinian's rule gold was mined in Balkans, Anatolia, Armenia, Egypt and Nubia.[3] The discovery of gold in the Witwatersrand led to the Second Boer War and ultimately the founding of South Africa. The Carlin Trend of Nevada, U.S.A. was discovered in 1961. Official estimates indicate that total world gold production since the beginning of civilization has been 4.97 billion troy ounces and total Nevada production is 3% of that, which ranks Nevada as one of the earth’s primary gold-producing regions. http://en.wikipedia.org/wiki/Gold_mining

Kolar Gold Fields (KGF) (Kannada: ಕೋಲಾರ್ ಗೋಲ್ಡ್ ಫೀಲ್ಡ್ಸ್ Tamil: கோலார் தங்க வயல் ) refers to the area of lands owned by the Bharat Gold Mines Limited in Bangarpet Taluk of Kolar District of Karnataka state. It includes the township of the same name, viz. KGF, where reside mainly the families of the employees of BGML. To the east of KGF is a ridge of hills of which Dod Betta hill, 3195 feet above sea level, is the most conspicuous point. KGF is about 30 km from Kolar and 100 km from Bangalore. http://en.wikipedia.org/wiki/Kolar_Gold_Fields

Kolar is pea nuts.

Shekhar, many sources go into my spreadsheet, but it is grounded in the US Geological Survey database, which has now reached about 100 minerals. Re the "biggest con job" the US decided to discontinue the gold standard it had adopted after WW2, and moved to a fiat currency, with the world using the Superpower's currency as reserves - the biggest danger of this model is widening deficits, a predicament we seem to be in for the past few years. What would happen if the US were to cut off the $200 Billion/year infusion into prosecuting the Iraq-Afghan-Pak operation? Gold is a commodity like any other mineral - to arbitrarily assign it the monetary value of $31/ounce, and then have to juggle with the uncertainties of technological advances in mining gold and silver, as well as their differential, was unsustainable: there wasn't enough gold available to meet the needs of growing GDPs. Besides, the Chinese and Islamic empires had innovated financial concepts such as paper bills, credit, and checks. Money is an economic construct to enable trade. Gold is a fairly useless commodity, although it found practical use in electronics as the best conductor of electricity. Here are links to the USGS page for data on gold, as well as for a hundred other minerals and commodities: http://minerals.usgs.gov/ds/2005/140/gold.pdf http://minerals.usgs.gov/ds/2005/140/#data

@Qamar Rehmani: I do not disagree with the limitation of gold as a standard and its pusillanimity as a mineral. The limited point is that the trade surplus nations are funding the deficit without any assurance of holding the value of the US Dollar. US seems to be bent on destroying the value of the Dollar by blowing it up in smoke and making enemies around the globe. In comparison to Dollar, gold is still considered as "value" by many, certainly so by common Indian people. The amount of gold-stock in India must be some staggering figure. We are lucky that all of it does not find way to the market at the same time.

Kolar apparently is the only gold mine on the subcontinent. The Gangetic plane and the peninsula however are fertile. The link to the geological survey of the US provided by Qamar gives interesting figures of world production. It should however be noted that the US came on the global history scene at a much later date.

Qamar Rehmani : Thanks for excellent spreadsheet on Gold. Have been searching for this info from a long time.

@Shekhar: the ballooning deficits, coming after the huge surpluses during the 1990s does seem to indicate that we are in the midst of financial thrashing. After gold was freed of US currency constraints in 1971 (BTW, I don't think any nation backs its currency with gold), the attraction to the metal still burns deep in Indian culture, given the still widespread customs of gold purchases at weddings and religious festivals. Gold has seen the highest level of careful recycling - it is rarely scrapped, maybe buried at times past. Conservative estimates in my spreadsheet (link above) have about 55,000 metric tons of gold gracing India’s 200 million households and one million temples, worth about $3 trillion. Finding the right message to monetize this currently dead capital will get the Indian golden bird to soar once again. Is the attraction to hoarding gold genetic or will it lessen with improved liberal education? @RBSI: I am glad you found my gold spreadsheet useful.

@Qamar Rehmani: You are absolutely right. "Finding the right message to monetize this currently dead capital will get the Indian golden bird to soar once again." Very well said indeed. Gold standard was not such a foolish idea for it restrained governments from proliferating money. With the restraint of gold standard gone, governments merrily print currency in times of crises and pontificate about discipline in good times. Money after all is the medium of exchange and it has to have a relation with what is being exchanged viz goods and services. Attraction of gold runs really deeply ingrained even among educated people. You have wisely used the words "improved liberal education". Manufacturers of gold and nations holding gold stocks will be sorry to see Indians lose appetite for the yellow metal. (India's official gold reserve kept in RBI's custody is a tiny percent of its total foreign currency reserve!). You should see the kind of campaigns the World Gold Council (an international association of gold manufacturers and refiners) runs in India to promote consumption of gold here.

Have to admit...I have always been a gold bug !

Me too. I had always wanted to first hand feel what it is like to hold a Ten Kilogram gold brick in hand. In South Africa I visited a gold refinery and at my request they let me into their strong room where heaps of gold bars were kept. I could hold a 10 Kg bar in each hand and my liffe time wish was fulfilled. I can never forget that moment. Those of us who have read Edgar Rice Burrow"s Tarzan of the Apes will recall how the hero once cariied bars of gold on his shoulders from the forbidden city. Gold can make you mad, see Omar Sharif and Gregory Peck (and Ursula Andress) in Macenna's Gold.

@Shekhar : I have always admired the ease with which heros and villains in our Hindi movies carry briefcases full of gold bricks or biscuits and toss them here and there towards the end the movie shortly before embarking on fist fights in godowns full of empty barrels, cartons and ropes hanging from the ceiling which they are eager to conclude before the police arrive.

@Shekhar : I had a somewhat similar experience about thirty five years ago. A few months after joining SBI I was selected by the Vigilance Chief of the bank - an exception, for I was still on probation then - to carry out physical verifica...tion of cash balances held at a few Treasury branches of SBI which held "Currency Chests" on behalf of the GoI. Not having handled more than a handful of currency notes in my life till then, I was probably visibly nervous on hearing of this assignment. To calm my nerves and boost my confidence before proceeding to the assigned branches, the Vigilance Chief took me to the Main Branch strong room which was like a huge armoured hall,all steel and concrete, and asked the Chief Cashier there to throw open all the vaults lining the walls from floor to ceiling which he promptly did and I almost fainted at the sight of currency notes stacked in the vaults - may be few scores of crores of rupees. The experience of verifying cash balances at Currency Chests stood me in good stead when, upon completion of probation, I had to handle such Currency Chest brances in capacity of a Custodian or Manager.

@Deepak Ingawalr: I visited a real refinery, held real 10 kilo gold bars in my real hands in South Africa and I was fully awake. The lighting in the gold vault was kept purposefully soft and all that glittereed was gold. I do not have such ambition to see vaults full of currency notes unless they are new fresh from the printing press. If you visit the Government Mint in Bombay, the sight and sound of coins tumbling out of the machine is something to behold.

@Shekhar, thank you! I agree with you about the need for some standard that would rein in the current churn in the financial system. Gold and silver coins served an operational purpose as emperors and kings needed to have the metals in stock to pay their standing armies. Come to think of it, was it not the gold and silver that made its way from America to Spain to Europe to India, that provided Akbar, who reigned from 1556-1605, with the increased coins to maintain a larger army. As more gold and silver made its way to the Mughal emperors in the 17th century, they spent more. Shah Jahan expanded the empire in the Deccan, but spent from the treasury lavishly to build the Taj Mahal, and Delhi's Red Fort. Deepak and RBSI: gold does something to all of us - perhaps, as Shekhar says, its the World Gold Council's success in spreading the bug with viral marketing. But why has India's central bank bought 400 tons of gold at such a high price. Wait a year or two and gold will be selling at $400 an ounce.

@Qmar Rehmani:Probably gold was always stored as coins or small bars with markings. Keeping gold as ingots must have happened during the gold standard days. I also wonder if piracy on the high seas was a result of gold movement across the oceans. Pirates would have no use for spices and silk I suppose! That reinforces another thought that all art is a product of leisure and concentrated wealth! You are right about the Taj Mahal. The same can be said about wars. The State (be it the feudal or the capitalist State) must have huge surpluses to pay for the army, its upkeep and weapons with ammunition. All States with surpluses store WMDs. RBI bought gold when it was trading around US$900 per oz. It is trading above $1400. I have serious doubts if gold will revert to US$400 per oz ever now unless the world economy spins into a prolonged depression. However, given to inevitable fate of the US currency, Gold will hold up. RBI's holding of gold in any case was small and is small even after this purchase of 400 tons.

"Every day more money is printed for Monopoly than the U.S. Treasury" - this may be true today; how long will it hold good?