The increased tariffs on gold imports into India got us thinking about the broader implications of the interplay between physical commodity markets and government. Gold has always had a traditional place in Indian society, but the recent scaling up of imports into the country actually has driven up the country’s negative trade balance. While imports of physical gold have always been grounded in tradition, and thus should not necessarily raise red flags at the Reserve Bank of India, the very scale threatens to stem the amount of liquidity flowing to more standard investments such as stocks and bonds. In fact, the Reserve Bank is trying to find ways of encouraging investors to shun the metal for what they would term more productive investments. We find all this talk interesting, given our our own Federal Reserve and their attempts to boost investor confidence via the alleged wealth effect. We wonder what the official response of authorities here would be in the event that investors became more like the Indians with respect to shifting more of their wealth into physical assets as opposed to the financial markets. One would have to believe that the response might be similar, with duties, tariffs and other special taxes as possible deterrents to such a shift.