Real Wealth Vs. Paper Valuations

Sam is a painter. He has about \$50000 in cash and no particular income source apart from small gigs here and there. He is very savvy in his expenses and doesn’t waste any of it, painting most of the time.

He shows his paintings to one of his friends, who happens to be a consultant. The friend on seeing a particular painting, stops and wanders in exclamation, “Dude, you should show this to art galleries, they would pay 100s of millions for this”.

Sam gets excited. He gets some more consultants to do the review for his painting and they too tell him that they can sell the painting easily for 50 million dollars. He pays the consultants \$500 each in fee and they are off.

Sam is very happy. He is going to be a millionaire. He decides to celebrate. Spends 1000 dollars on dinner and wine. Next day, he meets a lot of people, “They say, yeah, this is a really wonderful painting. Congrats, you’ve come up with your masterpiece.” Read more of this post

The Wisdom Of Our Ancestors

Here is an excerpt from an interesting from the interesting article here:http://tsr.net.co/2011/07/sone-ki-chidiya-india/911

India is one of the largest importers of gold in the world. As per World Gold Council, a total of 158,000 tonnes of gold have been mined till date. Out of this Indians’ private holdings is considered to be the highest at 15,000 tonnes. American citizens’ holdings is a mere 4000 tonnes.

The estimates of private holdings with Indian citizens vary from 15,000 tonnes to 25,000 tonnes. Even accepting the lower estimate of 15,000 tonnes at current prices of approx US \$ 1500 per ounce, the valuation of the Indian private holdings is equal to US \$ 725 billion.

India’s GDP is around 1.5 Trillion US \$. If our economy has a growth rate of  8 %, the GDP increases by US \$ 120 billion. In the last one year, gold has appreciated from approx 1250 \$ per ounce to 1500 \$, an appreciation of over 20 %. In view of the rupee getting stronger against US \$, the appreciation in rupee terms is lower at about 15%. If the above rate is applied to the Indian household holdings of gold, the value of Indians gold holdings has gone up in the last one year by  about US \$ 90 billion.  Read more of this post