Earlier, the share market and the values of silver-gold used to go in reverse mode. The share market used to go up with the upward speed of economy. Along with that the value of properties also used to increase. In such atmosphere people previously used to invest on properties by selling the silver-gold kept in their lockers. Due to this, the prices of silver-gold used to go down. On the other hand when the economy suffered from depression the investors used to start disposing off shares and buying silver-gold .Thus, the prices of the shares used to go in reverse mode, but today the prices of both shares and bullion are high. Recently, the Mumbai share market closed on a historical high index of 21,000. Side by side, the prices of silver-gold and properties are also going up. The explanation of the increase in prices of gold along with the prices of shares lies in the globlisation of economy. Before the economic reforms of 1991, the impact on our economy of the global conditions was not much. In those days the Govt. had put restrictions on the investment of foreign capital and import of gold. As a result the fluctuation in the price of gold in the world market hardly had any impact on Indian market. Now the import of gold is under no restriction. As a consequence the price of gold in India fluctuates in line with the global prices.
The foreign investors always look for safe investment areas. Before the Second World War, the British pound was considered safe for investment. After the world war, the American dollar replaced it as a world currency. Till ten years before, the investors considered that their investment in the US Treasury bond was safe. So the investors used to buy shares of American companies, American properties or bonds issued by the American Govt. only. There were mainly three reasons of the strength of the US economy. The first reason of this was that the US was inventing newer and newer technologies like atomic energy, jet air plane, personal computers etc. The USA was earning a lot by selling these hi-tech products. Secondly, she was far ahead in the use and discovery of natural resources like mineral oil which was earlier mostly found in Texas alone before the First World War. The third reason of her strength was that its market was based on open economy. The American companies used to produce high quality products in the cutthroat competition created by an open economy. During past 4-5 years, the conditions have fundamentally changed. The inventions are now static. There has happened no great invention after the invention of the Internet during the 90s. Other countries are engaged in discovering their natural resources. For example India established off-shore oil wells. Many countries have adopted in the system of market based on open economy. Thus the uniqueness of the US economy is now no more there. The USA is now always mired in debts. Nevertheless, she has continued issuing American Treasury Bonds in a big quantity due to its increased demands. Some experts say that the US economy is going to collapse. That is why the investors today are hesitating to purchase American shares, bonds and properties. On the other side, there is no constant and strong currency. As a result, the investors are purchasing gold and silver as security and so the prices of these metals are touching the sky. Whether this increase would remain constant or go down in the coming days fully depends on the rise of the second global currency. At present, the rise of a new strong currency seems impossible. The economy of China has no transparency and openness. Europe is in peril as we have seen in the cases of the piteous economy of Greece, Ireland and Portugal. India has no social stability. Russia is broken. So the common sense says that the investors would keep investing in the silver-gold and their prices would continue rising. Today, the Indian companies are in great profit while companies of the US are not in a good condition. We have cheap labor and high-end technologies. The income of the Indian laborers has less chance to increase. In select big cities, the normal income does not increase with the increase in the demand of labors. In comparison of the developed countries, the income of our laborers would remain low for long. So our products would be cheaper and our companies would keep earning profit. The investors are purchasing the Indian companies’ shares and our share market is on the high. This pleasant condition would hopefully continue. The only danger is that of the internal explosion. The soul of the poor people burns because of cheap labor and rising richness. We must formulate such a policy immediately that would help India in taking the benefits of the present boom directly to the poor people.
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