When gold prices were spiralling upward in international markets by 48 per cent over the past five years, India saw the precious metal appreciate by a staggering 111.3 per cent. The falling rupee was mainly responsible for the meteoric rise of gold as an investment opportunity, with prices appreciating at over twice the international rates.

But while the steep fall in international prices of the precious metal over the past few trading days has been reflected in Indian rates, the decline has not been proportionate. Consequently, Indian investors have not been hurt as badly as their foreign counterparts.

If one considers a one-year time span, while international gold prices are down 15.7 per cent, in India, prices of the precious metal are down 9 per cent. This means that foreign investors who bought gold a year ago have seen greater erosion in their investment than their Indian counterparts. Even if we consider a shorter duration investment, Indian consumers have seen their gold investments lose less value than overseas investors. While global gold prices are down 13.5 per cent from their levels a month ago, Indian prices have only fallen 11.7 per cent. And from a three-month perspective, international gold prices are down 17.4 per cent, while the rates at home have only fallen by 15.1 per cent.

During these periods, the rupee has remained more or less stable, oscillating around the Rs 54 per dollar mark. But over a longer duration of six months, the correction in gold prices internationally has been mirrored by Indian rates, with both registering an 18.6 per cent decline.

Indian investors can thank the relative stability of the rupee in the last six months for not suffering a greater setback. The domestic currency was up 5 per cent during the year to April 16, 2013. It was also up 22.1 per cent from its levels three years ago and 35.6 per cent higher in comparison to April 16, 2008, one of the reasons gold remains one of the best performing assets in the last five years.

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