Gold’s Price Surge Skews Inflation Numbers Across Asia

(Bloomberg) — The surging price of gold is fueling inflation from India to Indonesia and forcing statisticians to decide whether jewelry made of the metal still belongs in consumer-price indexes.

In South Korea, gold rings will be dropped from the inflation basket for the first time since 1975 as part of a scheduled reweighting in December, Bang Tae Kyoung, deputy director of the statistics agency, said in an phone interview from Daejeon. “People are now buying gold mostly for investment purposes, and so it should be classified as an asset, rather than spending,” Bang said.

Gold has climbed 27 percent this year as turbulence in equities and currencies, money printing by central banks, and a decade-long bull market in the metal lure investors to an alternative store of value. Bullion vaults such as the Swiss Precious Metals facility in Singapore are nearing capacity, and Tiberius Asset Management AG warns that gold is in the final, overheated phase of an upswing.

“It’s more of an asset — it’s not a consumption item,” said Prasanna Ananthasubramaniam, Mumbai-based chief economist at ICICI Securities Ltd., a unit of India’s biggest private lender. As a “speculative asset class,” gold should be dropped from India’s basket in the next reweighting, he said.

Gold for immediate delivery was at $1,774.70 an ounce at 11:25 a.m. in Shanghai today after reaching a record $1,921.15 on Sept. 6.

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Posted by VBN on Sep 22 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry