Notes from Mumbai

Funny story. Before Chris and I arrived in Mumbai, we’d been invited to join a reader for dinner one evening. We did so on Tuesday. Today, we met the same guy, a former treasurer for the Indian stock exchange, it turns out, for lunch.

He took us around to his office… a four-floor building that looked every bit third-world from the outside, but as nice as any office in Baltimore, New York or London within. We meet his technical analysts… his stock traders… his tech team… and finally his commodities guys.

The room was full of 20-something men in high trading spirit; standing, sitting, lurching about their terminals shouting, etc. Jayesh, our host, introduced us to the head trader… about 28 or so… in Hindi.

“Ahhh…” he immediately asked, in English: “Why are you shutting down the Rude Awakening?”… first question. No hello. Nothing. No kidding.

The gentleman, Chirag, turned out to be the gold trader for our friend Ajit Dayal’s Quantum Fund. They’ve developed an ETF in which each segment you buy is backed by 10 grams of gold. Unfortunately for U.S. investors, the ETF is available only to Indians here in country or those of Indian origin investing worldwide.

“It’s an auspicious day to buy gold,” Chirag told us. Yesterday, the Hindu festival of lights known as Diwali commenced. By tradition, this is the day when Indians buy gold and property and open stock trading accounts. They believe the festival will bring them good luck throughout the year. In the office here at, a pandit (local spiritual leader) set up shop with some candles and blessed each member of the staff, along with a curio from that person’s profession. On the shrine in front of the ceremony, Rahul, the firm’s CEO, has a copy of the Stock Market Yearbook 2009 — the flagship publication for the group. (Got some good video footage that I’ll be converting into some documentary shorts over the next few weeks.)

Chirag then took us to see the largest market maker in physical gold in the country. We had to go down to the part of town where all the open-air jewelers display their wares. The streets were so crowded with foot traffic, merchants, beggars, fruit and fabric vendors we could barely get the car through to our destination. In through a tiny, dank and grungy side alley we went, up a 100-year-old iron elevator… through a couple locked doors through which we had to be buzzed… and into a room the size of a good walk-in closet, where sat four young guys trading bullion at computer terminals.

The market maker entered, a big man wearing lots of gold himself, and explained for half an hour or so how his business works. India imports anywhere between 550-700 tons of gold per year. The big man sitting in front of us does the lion’s share of that business.

“Where do you expect gold prices to go over the next year?” we asked him.

He couched his answer very carefully but gave us an upside potential of $1,300 an ounce.