-- Published: Tuesday, 19 September 2017 | Print | Disqus
By Jp Cortez
October 19, 2017 marks an important holiday in the Indian culture. Diwali begins.
Diwali is one of the biggest festivals for Hindus, Sikhs, and Jains. It is a lavish celebration of the victory of light over darkness with its gleaming candles, luxurious works of art, and opulent feasts. Diwali is also characterized by gift giving. Buying and gifting gold is considered auspicious during Diwali.
Given the nature of the holiday and the number of people who celebrate it, according to CNBC, the past few years have seen a tendency for the gold price to rise around Diwali. Last year during Diwali, Mihir Kapadia, founder & CEO of Sun Global Investments, said “As heavy consumers, the festive seasons always tend to surge the demand, and considering the current low prices, this should increase the market activity and thus push the prices a little.” Kapadia continued, “We do not expect it to boost prices significantly as the overall market is subdued due to the worries about rising interest rates.”
There is no shortage of economic analysis during the buildup to this year’s celebration as The Economic Times reported “bullion has climbed almost 10 percent on the Indian market this year as world prices increased on… reduced chances of a further hike in U.S. interest rates in 2017.”
However, history shows that rising interest rates do not necessarily make bonds and cash more attractive or push the demand for (and therefore the price) gold down. Interest rate hikes are usually a gold bullish event.
“Gold prices going down after rate hikes is a myth propagated by the financial establishment and portfolio managers who may be intellectually lazy or have a vested interest in scaring people away from gold,” says Stefan Gleason, president of U.S. precious metals dealer Money Metals Exchange. "In reality, central banks are almost always behind the curve, and real interest rates may be going in the opposite direction despite the rate hikes."
Slaying the Beast Takes Multiple Blows
Diwali is a grand, extravagant multi-day festival celebrating many things by many different groups of people. One of the more popular tales remembered and celebrated during Diwali is that of the brave Lord Rama. According to legend, he returned from exile after having saved his kidnapped wife and slayed the evil demon Ravanna.
This tale of glory and triumph evokes the sound money camp’s monetary hero, gold, facing the evil government and its minions, the “professionals” who often have a cynical bias against the yellow metal.
In the grand battle, Rama fights fiercely against Ravanna and his footmen. After a long and taxing battle, Rama delivers a blow that decapitates Ravanna’s central head. Unfortunately, another head appears in its place. Finally learning that Ravanna’s secret was an immortality nectar held in his stomach, Rama fired an arrow that finally laid Ravanna to rest.
Like Rama, gold finds itself fending off attacks from all sides. The federal government has been striking blows at gold since 1933, when Roosevelt banned all private possession of gold and required it be handed over in exchange for paper money. Gold has had all sorts of taxes levied against it. Gold and silver coins were stripped of their constitutional role as the only forms of money states could recognize as legal tender in payment of debts. Today, countless Wall Street types make a living trying to pierce the armor of gold in print and on television.
Fear not! It’s true that sound money’s lionhearted soldier hasn’t launched the fatal arrow that finally slays the fiat money system run by the world’s central bankers. But the battle is tipping further in the direction of our fearless hero every day.
States are taking the necessary steps to unshackle gold from its bureaucratic chains. 36 states across the union have an exemption against sales taxes being levied in precious metals purchases. Arizona has moved towards widespread acceptance of gold and silver by recognizing its legal tender status while removing capital gains taxes on precious metals holdings, with Wyoming, Idaho, and Tennessee not far behind. Texas is setting an example on how to shore up pension funds using gold, not to mention creating its own bullion depository.
Step by step, hard money forces are making advances. They still have a long way to go, of course. But they can draw inspiration from previous epic struggles against powerful foes.
During Diwali, millions of people around the world will celebrate the victory of their courageous and valiant hero, Lord Rama. Meanwhile, we can all celebrate gold’s continued ability to not only survive the onslaught coming from gold-cynics everywhere, but also to steadily re-establish itself as constitutional money.
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-- Published: Tuesday, 19 September 2017 | E-Mail | Print | Source: GoldSeek.com