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Why people in our country invest in Gold ?

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  • Why people in our country invest in Gold ?

    Why people in our country invest in Gold ?

    Why people in our country invest in Gold ? This is an interesting subject. First we should look into the Social structure of India, where majority of the population still live in villages. Life of most of the people who live villages depend on agriculture. The people at large have to look for safe investment of their savings for eventualities and future. Only commodity that can be saved easily, and available at the time of need is precious metal like Gold and Silver. In a long term investment, only value of Gold compensates the vagaries of inflation. At the time of need the old lady in village knows that she can encash Gold much easily than other investments.



    Currency Note issued by Reserve Bank of India is a form of Negotiable instrument known as "promissory note", which is used as a legal tender for certain value. The paper currecy gets its value on the guarantee of the Government Bank. But we do not get the same value of our investment in paper currency when we encash it after say ten years. If the money is kept in a Bank or Financial organisation it earns interest, but this will never compensate fully the erosion of value of Rupee during the period. Over the years real value of Rupee has eroded considrably resulting in the fall of national economy to abysmal depth.

    Fall of Standard Rupee from Silver to Steel:
    Here is some additional information on the History of Rupee.
    As per the Act XVIII of 1835 the weight of the rupee coin was standardized at 180 grains troy (1 Tola or 11.663 8038 Grams) and its fineness at 11/12 (i.e. 165 grains of pure silver and 15 grains of alloy) Diameter 1.3". The rupee coin would bear the effigy of the then king of United Kingdom. This standard continued till 1939. Due to the World war II in 1939 the price of silver rose high. The metal value of the silver rupee coin surpassed its face value. Hence the Government decided to issue rupee and other Standard Silver coins in quaternary alloy consists of 50% silver,40% copper, 5% Nickel and 5% Zinc.

    In the year 1947 the Rupee Coin was issued with Metal composition Pure Nickel and the diameter changed to 1.1".

    In 1975 with a view to conserve Nickel which was in short supply throughout the world, the Government of India decided to issue rupee coins in cupro nickel Metal composition Cupro-Nickel (75% Cupper and 25% Nickel)
    From 1975 to 1982 with less weight of 8grams. And the weight was further reduced to 6 grams from 1983-1991.

    Ultimately Rupee coin was issued in Stainless steel from 1992. With metal composition of Ferrite Stainless Steel (80.5% Iron, 18% Chromium) with Weight - 4.85 grams and Diameter 25 mm.
    (information gathered from net resources)




    Brahmanyan,
    Bangalore.
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