Gold loses its lustre for Indian families

[jmdpet]

http://www.ft.com/cms/s/0/cc8c3a94-c...0779fd2ac.html

Could Indian housewives be calling the top of the gold market? Many are selling unwanted jewellery into a booming recycling market and deferring all but essential purchases of the precious metal, commodity traders, economists and jewellers said on Wednesday.

...

Kamal Motiyani, a jeweller in Sarojini Nagar Market, a bustling middle-class shopping district in south Delhi, said his sales of new jewellery were “down 30-40 per cent in the last 10 to 15 days”.

At Tribhuvandas Bhimji Zaveri, a jewellers on Janpath, one of the most prestigious shopping streets in the capital, business is also slow. “According to Indian custom it is mandatory to buy, but sales are 50 per cent down,” said P.N. Sharma, a salesman.

Spending on jewellery represents close to 75 per cent of India’s total consumer demand for gold, some 722 tonnes in 2006, according to World Gold Council figures.

[GRG55]

Re: Gold loses its lustre for Indian families

http://www.ft.com/cms/s/0/cc8c3a94-c...0779fd2ac.html

Could Indian housewives be calling the top of the gold market? Many are selling unwanted jewellery into a booming recycling market and deferring all but essential purchases of the precious metal, commodity traders, economists and jewellers said on Wednesday.

...

Kamal Motiyani, a jeweller in Sarojini Nagar Market, a bustling middle-class shopping district in south Delhi, said his sales of new jewellery were “down 30-40 per cent in the last 10 to 15 days”.

At Tribhuvandas Bhimji Zaveri, a jewellers on Janpath, one of the most prestigious shopping streets in the capital, business is also slow. “According to Indian custom it is mandatory to buy, but sales are 50 per cent down,” said P.N. Sharma, a salesman.

Spending on jewellery represents close to 75 per cent of India’s total consumer demand for gold, some 722 tonnes in 2006, according to World Gold Council figures.

Maybe they're cashing in some gold so they can buy one of those $2500 Tata cars?

Don't really understand why this journalist is surprised. Not only has there been another rapid price increase in gold to temporarily dampen demand, but the seasonality is well known. Most years gold demand in India falls off (typically 40% or more) in the first and second quarters. Highly unlikely that "Indian housewives" have permanently lost their appetite for gold.

It was this part of the article that caught my attention:

● BHP Billiton, the Anglo-Australian miner, handed over this week the gold, silver and bronze for the Beijing Olympic and Paralympic Games, writes Toby Shelley in London.

It is donating 13.4kg of gold, valued at some $384,000 (€260,000, £195,000), along with more than one tonne of silver, worth some $690,000, and almost seven tonnes of copper.

Wonder how long before the Chinese just buy the whole company, instead of just its output...

[grapejelly]

Re: Gold loses its lustre for Indian families

when gold gets going for what it is, a monetary metal, this whole supply and demand thing will fade into insignificance. I mean that there will be huge demand the way there is demand now for treasury securities or cash. The Indian wedding season and all of that is just a sideshow. Something to write about.

[c1ue]

Re: Gold loses its lustre for Indian families

when gold gets going for what it is, a monetary metal, this whole supply and demand thing will fade into insignificance. I mean that there will be huge demand the way there is demand now for treasury securities or cash. The Indian wedding season and all of that is just a sideshow. Something to write about.

It is possible, but in the last gold mania - 'investment' gold only reached roughly 1000 tons/year. I wrote about this some time ago, I'd have to dig hard to find it again.

If I recall correctly, this amount was only somewhat larger than 'jewelry' gold demand back then - and more importantly faded very rapidly to historic levels once that bubble popped.

On the other hand, India's gold consumption is itself very large:

India consumes nearly 800 tonnes of Gold Bullion, accounting for about 20% of world gold consumption.

http://goldnews.bullionvault.com/ind...stry_120620073

Thus unless 'investment' gold starts well over the 1000 ton mark, I'm not sure just how much impact 'supply' will have.