India, Oct. 22 -- justify;">Diwali is a few weeks away. A small shop owner needs fresh stock on the shelves, but most of the cash is stuck in the business. So what's the quickest way out? For many families, it's the jewellery kept at home. A loan against it can come through fast. What people often miss is that the gold loan interest rate">gold loan interest rate">gold loan interest rate on such a loan isn't fixed. It keeps moving with the economy.

Anyone running a home budget or a small business will find it useful to know why. The gold loan rate of interest a lender quotes depends on a few things: what the central bank decides, how high inflation is, and how much money is moving around in the system. Once borrowers understand this, plan...