Buy Gold via Gold ETF

It’s Akshaya Tritiya time of the year again and people are out in markets to buy gold. Is there a smart way of buying gold than traditional way of buying gold jewellery from jeweler? Yes there is. Check it out.


The easiest way people follow traditionally is to buy gold from jewelers in the form of ornaments. It is best way if you want to buy ornaments and make your other half happy! But what if you want to buy gold only for investment? Do you know that jeweler charges you making charges of more than 15 to 20% of total cost of gold jewellery that you are buying? And then sales tax is added on top of it. Immediate loss of more than 20% in your gold investment the moment you walk out of jeweler’s shop! And then when you go to sell the same gold after some time, another few percentage points (often more than 10%) of loss in the name of purity loss, breaking charge etc. that jeweler thinks of. Eventually you end up paying more than 30-40% of your gold purchase price (your investment in gold!) as making charges, breaking charges, taxes etc. So where is your profit that you want to earn from the appreciated price of gold? It’s in the pockets of jeweler (making/breaking charges) and government (taxes).

Gold bars or gold coins offered by banks you think is a smart choice? Banks often charge you more than 10 to 20 % on top of market cost of 24 carat gold when they sell you gold bars and coins.

Also, when you buy gold in the form of jewellery or gold bars and coins, you are always under threat of theft of gold.

Think smarter.

Unless you have black money that you want to convert in gold without any receipts, and you want to make most out of appreciating gold price being smart and savvy investor, go for Gold ETF.

Gold ETF
Buying Gold ETF is purchasing gold in electronic form. You can buy them just like you buy the stock of any company from your broker. Gold ETF makes it easier for you to invest in gold. The investment objective of Gold ETF is to provide you with returns that closely correspond with the domestic price of real gold.

They are easy to purchase since you can buy even just one gram at a time. Over time, you can build up your gold portfolio to the level you want.

Gold ETF Features
1. Cheapest form of pure physical gold with no premium or making charges
2. No issues of wastage or impurities like in the case of physical gold
3. Tax efficient way to hold gold, No Securities Transaction Tax or wealth Tax
4. Can be easily purchased or sold anytime at transparent real time price
5. Can track your investment value in real time
6. No worries of theft and also save on locker charges
7. Benefit on long-term capital gains



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Why should you buy gold now?

It is not a news anymore that Gold price is breaking new record highs everyday. While researching and reading as part of my "food for thought" habit, I came across this excellent article on internet written after thorough research. I thought this is the stuff I must share with IndianStocksNews.com readers.

As it is rightly said, Every sensible investor should have gold in his portfolio, be it physical or thru GOLD ETF. So I have it. But with increasing financial instability globally is making Gold climb the price charts everyday, I decided to research if I should add more Gold to my portfolio at this point of time or not when Gold is already at it's peak?

I came across one article, published by Dr. Ron Paul who is a Republican member of American Congress from Texas, America. He has explained very beautifully, IN YEAR 2006, why Gold prices would increase in coming years, due to deeds of American government. And why American economy will collapse soon. Mind it, he has written all this in year 2006 when Gold was $600 per ounce. Today Gold price is $1800 per ounce.

Read the article by Dr. Paul Allen here.

My thoughts
After 5 years of this article published in 2006, Gold is at $1800 per ounce. 3 times what it was in 2006 in just 5 years. Mostly due to the reasons stated in above mentioned article.

And now America has lost it's credit rating from AAA to AA+. American economy went in recession, housing sector collapsed. Debt has climbed to mountains and for which America has no money to repay it. What is America going to do to keep the show running? Print more money, that will further devalue the dollar and it will further make gold expensive.

I have decided to put more money into Gold, not to make investment gains but to protect the purchasing power of it. Of course I expect it to give me more returns than fixed deposits too.

What do you think? Feel free to share your opinion using comment form below.

GOLD ETF Mutual Funds - Most Hassle-free Option To Invest In Gold

Gold has suddenly become a preferred investment option thanks to economic turmoil. Not surprising, as it was always considered a safe hedge against such developments.

However, it need not necessarily come into your investment radar only during uncertainty. According to investment experts, gold should always be part of the portfolio of a person who wants to preserve his wealth.

Diversification is an important to tool to preserve ones wealth over a long period. When we talk to our clients we tell them fixed deposits, corporate deposits, stocks, gold... all should be part of their portfolio , says a wealth manager with a bank. We explain to them that spreading their investments across asset classes will help them withstand the bad performance of a particular investment.

For example, recently investments in gold fetched handsome returns when stocks were faring badly , he adds. However, the new crop of investors have left financial advisors a worried lot. They say most new investors have unrealistic expectations from gold. Most remember that gold had given very high returns a few months ago. They believe it would happen often, says the wealth manager.

Transcend Consulting director Kartik Jhaveri says, Investors should not focus on such sporadic returns. It is mainly because of volatility. For example, the dollars weakness, crude prices going up, uncertainties in the global economy would have a positive impact on gold prices. He says, Over a long period gold would give around 6-8 % returns. If you look at the returns in 10 years, it would just about beat inflation. Another dilemma faced by investors, point out consultants, is that they dont have a definitive idea about which is the ideal form of investing in gold. Many investors apparently would still prefer buying gold coins and bars sold by reputed banks (if not jewellery) and safe-keep them in their bank locker.


This method, according to investment experts , is the least preferred and inefficient option . This because most banks dont buy back gold and the investor must then turn to retailers to strike a good deal. Meanwhile in the retail market, often jewellers prefer exchanging the coins or bars with ornaments itself rather than pay cash to such customers. So, if you are investing in physical gold, be prepared for some hiccups when it comes to liquidating it. Jhaveri says it is better for investors to go for exchange-traded gold funds, especially if they are looking for a hassle-free investment option. These are mutual fund schemes investing in gold that you can buy and sell in a stock exchange. Since you dont own gold in the physical form, you dont have to worry about liquidating it. You can sell the units of the scheme in a stock exchange at prevailing prices. Though it may look the most convenient form of owning gold, the idea is yet to catch up with common investors, say financial consultants.

If you are a bit more adventurous, then you may consider directly owning stocks of some gold mining companies. Sure, they carry more risk, but they can also reward you, says Jhaveri. If you have even more appetite for risk, you may even consider trading in gold futures in the commodity market.

Read more on Gold-ETF

Bring Home Gold Mutual Funds (Gold ETF) This Akshay Tritiya

BUYING gold on the day of Akshaya Tritiya is considered auspicious. So, this year bring home gold either in the form of Gold ETF. Traditionally, your only option when it comes to buying gold was in the physical form. But with the launch of Gold Mutual Funds (Gold Exchange Traded Funds or ETF), you can, now, buy gold in the demat form.

Ask two questions before you go shopping:

1. Should I invest in gold?

2. If yes, then which is better -- physical gold or gold ETF?

The answer to the second question is easier, so let's look at that, first.
If your shopping is purely for investment purposes, then Gold ETF scores over physical gold. Here's why.


1. Low cost
When you buy Gold ETF you have to pay only the brokerage charges, which is usually around 0.5 per cent vis-�-vis shelling out between 10 and 20 per cent as premium and/or making charges if you buy physical gold. To store physical gold, you may incur locker and insurance charges. For ETFs, you pay the annual fund management charges of approximately 0.5-1 per cent.

2. Transparency
For ETFs, the rates are pretty transparent as they are linked to international prices. But there's no consistency in gold prices across various jewellers or banks, even within the same city.

3. Purity:
You need not be concerned about the purity of gold in the case of ETFs.

4. Security:
No one can steal your Gold ETF units!

5. Capital Tax Gains:
In case of physical gold, the long term capital gain tax becomes applicable only when the holding period exceeds three years. The limit is one year for Gold ETFs.

6. Wealth Tax:
Physical gold attracts wealth tax whereas Gold ETF is exempt from wealth tax.

7. Convenience:
Call up your broker and your job is done. You don�t need to visit the nearest jeweller with loads of cash.

Also Read: Gold Investment

Read More on Gold-ETF

GOLD ETF - Mutual Funds Are Planning GOLD ETF Funds Due To Rising Gold Prices

MUTUAL FUND houses are rushing to cash in on the opportunity offered by rising gold prices and investor interest.

While Kotak Mutual Fund is launching its second gold related scheme, Sundaram BNP Paribas AMC and SBI Funds Management are looking to add gold fund products to their kitty SBI launched its ETF late last month and Sundaram plans to launch its offering after June as the elections would be over by then and there would be no volatility realting to it, said TP Raman, managing director, Sundaram BNP Paribas AMC.

Kotak Mutual Fund filed its offer document to launch its Gold ETF fund of funds while it already has an ETE Fund houses am of fering such products because it is the only asset class generating returns, said Keyur Shah, associate director, World Gold Council.

With stock markets down and gold having generated close to 20 per cent in the last one year, fund houses that did not have a gold fund in their kitty are looking to have one.

"While we are looking to complete our bouquet of offering by introducing it, gold as an asset class stands a good chance as an investment mode, since equities will no longer generate returns similar to what they produced earlier, said Raman.

Checkout:
Gold Investment
Gold Deposit Scheme From State Bank of India (SBI)
Gold Price - Where would it go? Why Should You Buy Gold Now?

"We want to add gold to our investment portfolio," added Ritesh Shah, gold fund manager, SBI Funds Management.

Fund houses also claim to have received demand for launching gold funds through market research and inputs received from brokers.

Even though gold prices softened over the last one month, the outlook for gold remains positive, said Shah from World Gold Council.
Source: Hindustan Times

Read more on Gold/ETF

Gold Price - Where would it go? Why Should You Buy Gold Now?

For several years now, gold analysts have told investors pretty much the same thing. They said ‘buy gold’ when the price was Rs 7,700 per 10 gm in January 2006. They again said ‘buy gold’ when it touched Rs 9,200 in 2007, and then Rs 10,700 in January 2008. Last month, the price of gold touched an all-time high of Rs 15,700 per 10 gm and these analysts were still parroting the same advice.

It seems they will be proved correct once again. Gold is the only asset class that can hold out the assurance of value at a time when most other assets are being devalued by falling markets or inflation. This is the reason most analysts are bullish about the prospects of the yellow metal and expect prices to cross Rs 18,000 per 10 gm by the end of 2009.

This article is from Money Today authored by Babar Zaidi who spoke to a range of experts and came up with four reasons why you should consider investing in gold even at these stratospheric rates.

1. The global economy will remain in the doldrums
The world economy is in serious trouble and is likely to remain so in the coming months. The IMF has forecast that global growth in 2009 will be just 0.5%. This is the slowest growth recorded by the global economy since 1945 and far lower than the 2.2% estimated by the IMF in November 2008.

In these difficult times, gold becomes the automatic choice for investors who are searching for a safe option to park their money. “The global uncertainty and financial crisis don’t seem to be ending, which underpin gold’s role as a safe haven,” says Devendra Nevgi, CEO and CIO of Quantum Mutual Fund. True, investors are buying gold as if there is no tomorrow. Don’t go by the lack of retail interest in physical gold. The real action is in the commodity markets and ETFs.

The holdings of the world’s largest gold ETF, the US-based SPDR Gold Trust, ballooned to a record 1,029 tonnes on 19 February, up 250 tonnes or 32% in just 50 days in 2009. “If this trend continues, we could see a breakout in gold prices. The uptrend should continue till we see the financial crisis softening,” says Renisha Chainani, research analyst with Anagram Comtrade.

Will things improve in 2009? Unlikely. In India, the third quarter of 2008-9 was one of the weakest in recent times. But experts believe that there could be more aftershocks in the coming quarters. Also, the $700-billion bailout package announced by the US may not be enough. On 23 February, the Dow Jones dropped to a 12-year low. “If the global outlook continues to deteriorate, we could see a rally in gold. So maybe Rs 17,500 is possible much before year-end,” says an analyst with Kotak Commodities.

2. Dollar may depreciate against major currencies
The price of gold and the value of dollar have an inverse relationship. If the value of the dollar drops, more dollars would be required to buy the same amount of gold. So, the value of gold stays unchanged but the devaluation of the dollar pushes up its price. If the dollar declines against other currencies, it will also weaken against gold. This negative correlation may not be evident on a daily or weekly basis, but is almost always true over longer periods.

When the dollar was falling in the first half of 2008, gold was rising. But the abnormal market conditions over the past six-seven months have belied this principle. That’s because across the world a lot of dollardenominated debt is being purchased, increasing the demand for the dollar and pushing up its value against other currencies, even as gold prices have continued to climb. Experts say the current rise in the dollar is an aberration and it is ultimately expected to decline.

Also, some analysts fear that the US may resort to printing more money in the coming months to tide over the financial crisis. This would fuel inflation in the US and cause the dollar to slide. “Liquidity infusion by global central banks would create hyper-inflation in the next couple of years. Gold would emerge as an alternate currency for preserving wealth,” says Lakshmi Iyer, head, fixed income and product, Kotak Mahindra AMC

3. Crude prices could bounce back to $65 a barrel
Gold and crude oil prices move in tandem. At least that’s the general rule because high oil prices lead to high inflation, which in turn makes gold attractive as an investment. But we saw this correlation break down in the black swan year that was 2008. Crude oil prices touched an all-time high of $147 per barrel in July 2008, and then slipped, while gold continued its northward journey. The fall in crude prices was led by a huge drop in demand in the second half of 2008. Opec scaled down production, but the price fell to $30 in December 2008.

Crude prices are hovering around the $40 mark, but analysts expect them to rise in the coming months. “If the US government’s stimulus package works, global demand for crude will rise. Crude prices might touch $65 a barrel by the end of 2009,” says Naveen Mathur, head of commodities and currencies, Angel Broking.

That puts gold in a sweet spot. It will be a good hedge against deflation if the economy doesn’t improve. And it will be a good investment to counter inflation, if it does. Either way, gold’s value will go up. “We are very bullish on gold. By the end of 2009, Rs 17,500 doesn’t seem a very high price for gold,” says Mathur.

4. Global demand for gold would exceed supply
Adam Smith’s invisible hand will also push up gold prices in 2009. While the demand for gold is on the rise, gold mining companies have been cutting production for the past three years. The South African gold output declined by 14% last year, while the US production was down 2%. With a 3% growth, China was the leading producer in 2008. Also, the total gold sold by global central banks dropped by 42% to 279 tonnes in 2008. This has been the lowest level since 1996. These cutbacks on production and sales are gold-friendly and would enhance the value of gold.

But don’t buy right away. Experts expect a correction due to profit booking at higher levels. Others point to a certain seasonality in the long-term price trends. Gold prices tend to peak in March and then fall a bit before resuming the uptrend. So, buy just 10-15% of your planned purchase and wait for the correction.

Also, gold should not have an inordinately large allocation in your portfolio. As always, the principle of asset allocation should apply. While the exact figure depends on an individual’s financial profile, experts advise that you should allocate around 10-15% of your portfolio to the precious metal.
Source: Money Today

There is another thought to this, a contratrian view about Gold prices. Read it here. Gold - Has The Bubble Built? Will It Burst Soon?

Read more on Gold here.

Gold - Has The Bubble Built? Will It Burst Soon?

The world over, air has whooshed out of bubbles in stocks, crude oil, metals and real estate. But before recovery comes, another bubble needs to burst: the bubble in gold prices. Around $950 per ounce, gold is still close to its all-time high of March last year, when it closed at $1,002 per ounce, three times costlier than what it had been from 1999 to 2002.

A gold crash sounds like heresy. Deep in our hearts is a belief that gold is the ultimate asset, the final port of call in times of instability, the safest thing to buy and hold when all else looks doomed. But the heart is an unreliable guide for these things. And the warning bells are ringing at home.

India is the world’s largest hoarder of gold. It’s reckoned that the stockpile of gold here now is more than the 8,000 tonnes stashed away in the US treasury’s vaults in Fort Knox. Unlike the US, where the government owns most of the gold, India’s government owns a measly 300-odd tonnes. The rest is in private hands: bridal jewellery in Godrej almirahs or bank lockers. And little of this hoard comes up for sale.

We take our women’s jewellery seriously. Selling your wife’s bridal baubles would be a last resort, a signal to society of moral and financial bankruptcy, deserving more social scorn than passing wind in a room full of prospective in-laws negotiating an arranged marriage. In Bengal, the tale that Rabindranath Tagore’s wife pawned her bridal gold to help her husband fund a university is the stuff of martyrdom even today.

But at today’s prices our greed for gold has evaporated. In February, India’s imports of gold were close to zero, down from 28 tonnes a year ago. In March, it’s the same story, no imports. Jewellery sales in the marriage season are expected to be low and a lot of bridal jewellery is mothers’ hoard, recycled. High prices have forced the world’s largest gold junkie to kick its habit.

Yet, reports hint that gold exchange traded funds (ETFs), pieces of paper whose value is linked to gold prices, are still pulling subscribers. Why are people buying paper gold when they can’t afford the real thing for their daughters’ marriages? Because speculators are buying the paper, when folks that really need gold can’t afford to. But who needs gold and why?

Historically, gold has been valued for adornment. Till about 500 years ago, it also had value as currency. But around the 16th century, paper currency started flooding the world, with good reason. Gold is very dense and heavy. A little cube of gold, measuring one foot on each side weighs half a tonne, about as much as a Maruti 800. Today this cube would be worth Rs 85 crore, but for that transaction nobody would lug a gold Maruti around. A weightless electronic money transfer would suffice.

In the 21st century, there are specialised uses of gold in tiny volumes for scientists working on fuel cells, or semiconductors, or heat resistant fabrics. Gold is inert, it doesn’t decay. A gold tooth filling made 5,000 years ago will fill your tooth today. It’s malleable, you can twist it to make any kind of shape, something jewellers have known for ages. These properties make gold interesting in the labs. But researchers in labs don’t set the price of gold. Who sets the price of gold is a story with a beginning and end.

After World War II, Europe and large parts of Asia were devastated. Factories, roads, railways and bridges had been blown to bits, most young men were dead or injured and economies were in free fall. Hyperinflation raged, making currencies worthless.

The way out was plotted when a group of wise men gathered in Bretton Woods, America, and worked out a plan to save the post-war world. The wisest of them, John Maynard Keynes, figured that to stop hyperinflation the world had to anchor all currencies to the strongest currency in the post-war world, the US dollar. And for good measure, anchor the dollar to gold, because America then had 75% of the world’s yellow metal.

So the price of gold was fixed and the only country that suffered no war damage on its soil, the world’s strongest economy, said that it would buy gold from anyone and pay 35 reliable US dollars for every ounce of gold. Then American aid poured into Germany and Asia. Those economies revived, currencies stabilised and, perhaps for the last time in its history, gold was the final arbiter of value.

That lasted 37 years. By 1968 the world was restive, America was bleeding in Vietnam and Europe had consolidated.
Asia, especially Japan, was emerging as a manufacturing powerhouse. US inflation was soaring. A bunch of European speculators called ‘gold bugs’ bet that the US, plagued by poor growth, high deficits and rising inflation, would be forced to print money and snap the $35 per ounce anchor with gold.

The gold bugs were right. In 1971, president Richard Nixon pulled the plug on the gold standard. The dollar became a freely-traded currency and gold prices shot up to more than $40 per ounce in London. Through the 1970s and 1980s, the world was clobbered by two oil shocks that hiked crude oil prices by 15 times, high inflation and unemployment, and low growth. People turned to gold for value. The price of gold shot up from $40 to $850 per ounce, a return of about 30% every year.

But nothing is permanent. After 1980, normalcy returned and gold fell back to $250 per ounce and stayed there for nearly 20 years. From 2002, when all of today’s bubbles began, gold started climbing and now it’s right up there looking all pricey and out of reach. So when will it pop?

It took four months for the bubble in crude oil to burst spectacularly: from $147 a barrel in July to $40 in November 2008, a loss of more than 70%. We need oil to drive cars, heat homes, cook and power our airlines. But the yellow metal is intrinsically worthless. It shouldn’t take long for gold, a bauble competing with silver, platinum and other metals for jewellers’ attention to come off the highs.

About 150 years ago, John Ruskin wrote about a man who liked gold and turned all his wealth into it before sailing off. In high seas, a storm wrecked his ship. The man strapped his bag of gold around his waist and dived into the water and drowned immediately, dragged under by the weight of gold. Asked Ruskin: “Now as he was sinking, had he the gold? Or had the gold him?”
Source: Economictimes

Gold Investment

Gold investing is something people have started thinking again in this recession times. The average return on gold in the past year has been around 30 per cent. But if you are investing in gold, make sure it comes with tax benefits and security. Gold has been doing well because of inflationary fears and the downtrend in equity markets.

It is also proving to be a good hedge against inflation, justifying Indians' age-old faith in the yellow metal. The average return on gold in the past one year has been in the range of 30 per cent, making it one of the best performing asset classes right now.

“Due to the current economic downturn and inflationary fears, gold is doing well,” says Keyur Shah, associate director, World Gold Council, India. Gold has been rising over the past one year and experts feel the trend will continue . Some analysts expect the average gold price to hover around Rs 14,000 (per 10 gram) by December 2008.

Considering that gold prices are fluctuating between Rs 12,500 and Rs 13,000 of late (after touching the high of Rs 13,680 on July 15), there is still some upside. “A weak dollar following a slowdown in the US will definitely boost the value of gold even further,” says Kartik Jhaveri, director , Transcend India.

While individual gold holdings are the highest in India, most of it is in the form of jewellery. But jewellery is an uneconomic method of holding gold as on selling jewellery you will lose up to 10 per cent of the gold value and also the making charges that you paid during the purchase.

Jewellery vs Coins
“Those who want to buy gold for investment, prefer buying medallions and bars — this category has been growing in India over the past few years,” informs Mr Shah. Although coins and bars do not attract making charges, the sale discount is still there if the gold is not hallmarked. Hallmarked gold attracts the lowest discount and can be sold at 1-2 per cent lower than the market value.

Gold jewellery is not as good a investment as it is not as liquid as bars or gold funds, points out financial planner Gaurav Mashruwala. If you are saving to buy jewellery it makes sense to buy gold coins. These coins are accepted by jewellers in return for gold used in jewellery. If you intend to sell the coins, you may have to take a discount of up to 4 per cent, irrespective of how pure are the coins/bars.

But if you are holding a large quantity of gold, you will have to make provisions for storage and insurance as there is a security issue in keeping gold at home.

Gold exchange-traded funds (Gold ETF)
Gold ETFs are quite similar to mutual funds. The money you invest in gold ETFs is used to purchase physical gold of equivalent value. The advantage of ETFs are that the fund house that issues the gold ETF takes over the responsibility of storage and insurance of this gold. Gold ETFs are also tax efficient unlike physical gold. “While physical gold is considered a long-term investment, only if you hold the same for three years, gold ETFs acquire this status after one year,” says Mr Mashruwala.

In short, selling gold within three years of purchase will attract capital gains tax. Moreover , holding large quantities of physical gold can attract wealth tax, while gold in demat form does not. This apart, the spread between the buy and sell prices pertaining to gold ETFs is less than that of physical gold.

In other words, while your jeweller could sell you a gram of physical gold at Rs 105 and buy the same at Rs 95, you can buy a unit of gold ETF at Rs 101 and sell it at Rs 99. “Doing an SIP in gold would be the best option in the current scenario,” reckons Pritam Patnaik, AVP, Kotak Commodity Services.

Also Read: Gold Deposit Scheme From State Bank of India (SBI)

The two gold ETFs that are more than a year old — Gold Benchmark ETF and UTI Gold ETF — have delivered more than 40 per cent returns in the last one year. In case of others too, the returns have been positive for most months, in contrast with equity and debt funds that have posted negative or mediocre returns. However, the two world gold funds, which invest in stocks of gold mining companies, have had to suffer a fate similar to other equity funds. “It is advisable that you invest in gold as a commodity. Gold funds basically invest in gold mining companies. If you buy a gold fund, you actually invest and take a risk on that company and not on gold," adds Mr Gopkumar.
Source: EconomicTimes

Gold Deposit Scheme From State Bank of India (SBI)

Gold Deposit Scheme is back. The Rising cost of gold imports has once again prompted the largest public sector bank of the country, SBI, to re-launch its Gold deposit scheme to help bring privately held stock of gold in circulation and reduce country's dependence on imported gold.

This scheme which was first launched in Nov '99 at the initiation of the then union finance minister Yashwant Sinha in the budget 1999-2000 did not gel well with the public at large and was thus withdrawn within a few years of its launch.

The scheme, as the name suggest, invites investors to deposit their surplus gold, in any form, with the bank and earn interest on the same.

India being a country where gold commands more of an emotional attachment than a mere source of investment amongst the masses, the scheme is targeted only to those affluent and high net worth investors, temples and trusts for whom gold is just another asset class.

The minimum amount of gold deposit is thus pegged at 500 grams (1/2 kg), which is probably beyond the reach of general public at large.

Famous temples across the country are known to receive huge donations in gold and they are likely to be most preferred customers for the bank under this scheme.

During its previous phase, the scheme had garnered 400 kgs of Gold alone from Guruvayur Devaswom in Kerala. If the scheme does a turnaround this time, it may find its potential customers in the very famous Siddhivinayak Temple, Mahalaxmi Temple, Lalbaug Ka Raja and Shirdi's Sai Baba Temple to name a few.

The scheme has just been re-launched and is available only at select SBI branches. Currently only 50 branches across the country have been nominated to accept these deposits of which four are in Maharashtra.

Only two branches in Mumbai have been nominated for the purpose, namely, Mumbai Main Branch and Shivaji Park Branch. The bank is also setting up a separate branch at the gold hub of Mumbai - Zaveri Bazaar to manage these deposits.

The gold so deposited with the bank shall be checked for purity and melted at the Government of India mint. A certificate of purity will then be issued by the Government, which can be used by the investor to claim back the gold after the maturity period.

The bank has also clarified that the expenses incurred on assaying of gold shall be borne by the bank and will not be passed on to the customer.

During the investment tenure, the deposited gold will earn an interest, which is currently tagged as 1% (3 years), 1.25% (4 years) and 1.5% (5 years). The investment shall be locked-in for one year.

Premature withdrawal, after the lock-in period but before the maturity, shall attract a penal interest of 0.5% if withdrawn within 3 years and 0.25% thereafter.

However, unlike the regular deposits, interest here is calculated in grams and not in rupees. Thus, an investment of 500 grams of gold for three years shall earn 5 grams of gold as interest per annum, compounded annually. At the end of the maturity term, the interest so earned shall be converted into rupee equivalent of gold then and paid to the investor.

For the principal investment, investor will have an option to claim back pure gold (0.999 purity) or cash equivalent of gold as on that day. The scheme is also attractive from tax perspective as the interest earned as well as tax on any capital gains arising from rise in price of gold after maturity is exempt from tax. Gold so deposited has also been exempted from wealth tax.
Source: EconomicTimes

Gold Trend May Turn Bearish On Firm Stock Markets - Analysts

Gold, which surged significantly in the past few months, is likely to loose some of its sheen in the futures market during the week as the equity markets are showing signs of recovery following positive global cues, say analysts.

"If the positive performance of the stock market, which was witnessed during last week, continues in the same momentum people may shift their investment from gold, putting pressure on the precious metal," brokerage firm SMC Global's Vice- President Rajesh Jain said.


On Multi Commodity Exchange (MCX) the April contract for gold was trading at Rs 15,230 per 10 grams today, while on the Chicago Mercantile Exchange (COMEX) the it was trading at $ 923 an ounce.

Gold Futures have been in a correction mode during the past week also due to profit booking at higher levels. On Saturday, Gold April contract ended at Rs 15,315 per 10 grams.

Checkout: Should You Buy Gold at Current Gold prices?

Jain said, the prices are likely to consolidate in the zone of $ 900-950 an ounce (28.34 grams) level in global markets and Rs 14,900-15,600 per 10 grams level in the local futures market. In the Delhi Bullion market gold today traded at Rs 15,320 per 10 grams.

According to Bonanza's Head Commodity Research Tarun Satsangi weakening dollars against other currencies may also affect gold prices, which might go through further correction of about 5-7 per cent in the near future.

The precious metal may also come under pressure due to profit taking by investors, who want to take advantage of the current prices, Jain added.

Following global trend gold may turn bearish and trade in the range of Rs 14,800-15,700 per 10 grams on MCX, he said. On COMEX it may trade at $ 890-960 an ounce level.

Lack of confidence of investors on the precious metal at higher level is also likely to hit gold prices, he added.

Echoing the views, Geojit Comtrade's Senior Analyst Anand James said gold is likely to witness slight bearishness to trade at Rs 14,900-15,600 per 10 grams level due to better performance in equity market in the last few trading sessions. However, on the long to medium term gold remained bullish.

In a sharp contrast, Religare Commodities Metals and Energy Research In-Charge Somnath Dey believes the continuous dehedging by a number of mining firms is likely to help gold prices to remain bullish.

The prices may also get support from people's faith in gold as a safe haven for investment, Dey pointed out.

In the coming one week to 10 days, gold is likely to trade at Rs 15,500-Rs 16,500 level in the domestic futures market and at $ 960-970 an ounce at the international markets, Dey said.

Common investors
Checkout the statement made for traders. Buying at this level is going to be an expensive deal, says Naveen Mathur, Head of Commodities, Angel Commodities. Gold has moved very sharply in past few months in commodity markets. I strongly believe price correction in gold prices would happen soon. Do not get caught at these price levels. Gold is quoting very hoigh right now.

Ideally, an investor should have 15-20 per cent allocation in gold. If you have more than 20 per cent you can consider selling and if you think you allocation is not enough, it’s time to buy and balance your portfolio. Gold is an commodity and although it is performing exceedingly well, it doesn’t mean you should buy gold out of your entire investment allocation.

Apart from physical gold, best way to invest in gold could be via gold ETF. These are function like a mutual fund scheme for gold investment and is held in paper or dematerialized form, like stocks. Here you have advantages like you will not be paying any charges that normally jeweler charges. The brokerage that you would be paying will be definitely lesser in demat paper gold format.

GOLD ETF Mutual Fund Returns
Reference: EconomicTimes.com

Should You Buy Gold @ Current Gold prices?

We will try to analyze if gold investment looks viable in current investment scenario. IF you take a look at gold prices in the past few months, they have been moving in upward direction. From Rs 10, 650 for 10 grams last January 2008, the gold price has moved to Rs 15,490 today. It is at a seven month high and is up by 10% since January this year.

The World Gold Council reports that global demand was up by 4 per cent in 2008.
Gold price in last few days:

Gold prices have been increasing for some time now, major reasons for this are:

Weak equity markets
The volatility and instability in the stock market has boosted investor’s sentiments to move towards gold as an investment. Gold has been viewed to give steady and assured returns and hence investors move from choppy market to save haven like gold. Analysts say that people are rather bullish on gold, due to which gold prices have been rallying for a while now where Sensex is down 45% during same time.
Depreciating rupee
In simple words, when rupee depreciates, gold price increases. The international price of gold depends on the strength of dollar.

Central bank buying
The monetary policies issued by the Reserve Bank of India influences the investors actions, which in turn affects the investors decision to invest in gold or any other asset class.

Global economic crisis
There are reports of several governments like the Chinese, Russian who are diversifying their reserves into gold which is giving additional momentum to gold demand that is apart from the investment demands through gold exchange traded funds or gold ETF.

The "Oracle of Omaha," Warren Buffett, once said this about gold :-
"It gets dug out in Africa or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

So, should you buy Gold now or hold on?

Traders
At this level, it would be wise to sell as you can clock in decent profit. Buying at this level is going to be an expensive deal, says Naveen Mathur, Head of Commodities, Angel Commodities. The past few days have seen very volatile sessions in gold prices internationally and Indian markets because of the rupee depreciation. The prices may shoot up a bit more before going through price correction.

Common investors
Checkout the statement made for traders. Buying at this level is going to be an expensive deal, says Naveen Mathur, Head of Commodities, Angel Commodities. Gold has moved very sharply in past few months in commodity markets. I strongly believe price correction in gold prices would happen soon. Do not get caught at these price levels. Gold is quoting very hoigh right now.

Ideally, an investor should have 15-20 per cent allocation in gold. If you have more than 20 per cent you can consider selling and if you think you allocation is not enough, it’s time to buy and balance your portfolio. Gold is an commodity and although it is performing exceedingly well, it doesn’t mean you should buy gold out of your entire investment allocation.

Apart from physical gold, best way to invest in gold could be via gold ETF. These are function like a mutual fund scheme for gold investment and is held in paper or dematerialized form, like stocks. Here you have advantages like you will not be paying any charges that normally jeweler charges. The brokerage that you would be paying will be definitely lesser in demat paper gold format.

GOLD ETF (Mutual Funds) returns
Reference: MoneyControl.com

Loan against gold Versus a personal loan?

India's fascination with gold is well known and widely documented. We continue to stock up gold in physical and demat form in spite of the steady increase in prices over the last 12 months.

For purely cultural, emotional and safety reasons, gold today has become an integral investment/savings option and is a part of every savvy investor's 'asset allocation'.

A look at some eye-opening statistics will reveal the current market scenario. India consumes approximately 800 tonnes of gold per annum (inclusive of bars, coins, jewellery), with an estimated gold holding of close to 13,000 tonnes as on March 2007. With 95% of this holding in individual hands, this translates to a market value of Rs 15.60 lakh crore.

Gold is unique in its ability to find consumers in every customer segment and is the only investment/ savings option that cuts across caste, class and region— it also bridges the rural/ urban divide.

If one were to sample 10 people from a middle-class background in the country at random and conduct a poll on their investment holdings, it would not be unrealistic to expect eight-nine out of this group to have invested in gold, five-seven to hold NSC/KVP or insurance policies and four-seven to have self-owned property.

Barely one-two would have actually invested in equity or in mutual funds. Among rural areas or lower income groups as well, the percentage of people holding gold, albeit in smaller quantities, would be similar. While the reasons for accumulation of gold may vary across these customer segments, gold is arguably the asset most widely held by Indians.

It is thus ironic that the most widely held asset also happens to be the least productive and most illiquid as well, with most of us actually ending up paying money to keep the investment safe and secure. Personal/cash loans or home loans/loan against insurance policy are still in vogue as compared to loan against gold jewellery.

In the current macro-economic environment, where credit norms are being tightened and liquidity is scarce and as availing of loans becomes tougher across customer segments, leveraging secured assets such as gold/NSC/KVP/insurance policies, will certainly emerge as the best possible options from the borrower as well as lender’s perspective.

Loan against gold jewellery has traditionally been the domain of the unorganised sector, with either the local moneylender or the jeweller himself stepping in to fund those customers (especially in rural and semi-urban markets). Banks are relatively new entrants in this segment, though there are several NBFCs that have been fairly active in this space for a long time.

So if the penetration of loan against gold jewellery is so low, why has it not been addressed yet? In my view, the key reasons for this are — social stigma, lack of awareness, and lack of trust. Some of the customer segments that can be identified are:

Urban salaried & self-employed: With loan disbursal in 60 minutes at the closest branch and minimal documentation, loan against gold jewellery is a convenient option for this segment of customers. Further, only interest is payable on the loan amount, as against an EMI on other loan types, hence net outflow is much lower than in the case of an EMI-based loan.

Customers with low/under stated income: Assessment of income through IT returns or salary slips and cash flows to repay are two of the most important determinants for credit underwriting by any financial institution. There is, however, still a large section of customers that draws cash salaries or has very low incomes. Hence, they are either not eligible or get a lower amount than they require, because of the income stated on paper. For these customers, the secured loan option offers an alternate means of encashing the investments.

Customers in rural/ lower socio-economic strata of the society: Organised credit has been largely focused on urban India and largely been dominated by personal installment loans. Distribution of outstanding credit among banks indicates that while the share of personal loans has grown from 11.2% in 2000 to 22% in 2007, share of agricultural credit has grown only marginally from 9.9% in 2000 to 11.8% in 2007.

Further, among banks, RBI data shows that the share of rural/semi urban areas in total credit outstanding among banks has dropped from 28% to 23% between 1997 and 2007. Loan against gold jewellery/NSC/KVP/insurance will, therefore, provide an opportunity for financial inclusion.

Loan against gold and securities is offered either as a term loan or as an overdraft facility based on customer requirement. Options are also available under various forms of gold be it physical, gold ETFs or SBI gold certificates.

In a typical loan against gold transaction, only regular payment of interest during the tenure of the loan is required with the principal amount being repaid at the end of the tenure. This allows customers to manage their cash flows better on a monthly basis, and use one-time or lump-sum payments to repay the principal amount. Further, no other loan type offers funding faster than loan against gold.

Finally, given the emotional attachment to gold, the probability that the entire family is involved in the decision to borrow using this option makes them morally responsible to repay as well.

To sum up, the organised banking sector can use loan against gold/securities to bring customers, who were earlier excluded from their consideration set, into the mainstream banking as the sector itself broadens its reach in semi-urban/ rural areas. With customers, too, getting rid of their inhibitions and realising that this is a logical and smart borrowing option, loan against gold/ securities would appear to be at a strategic inflection point and is well poised for accelerated growth in India.

How much gold is there in the world?

Gold is considered one of the most precious metals in the world; and it has been used as a symbol for purity, value and royalty. But do you know much gold is there in the world? And who owns most gold?

If not, read on:

What is gold?

Gold is a rare metallic element with a melting point of 1064 degrees centigrade and a boiling point of 2808 degrees centigrade. Its chemical symbol, Au, is short for the Latin word for gold, 'Aurum', which literally means 'Glowing Dawn'. It has several properties that have made it very useful to mankind over the years, notably its excellent conductive properties and its inability to react with water or oxygen.

Where does the word gold come from?

The word gold appears to be derived from the Indo-European root 'yellow', reflecting one of the most obvious properties of gold. This is reflected in the similarities of the word gold in various languages: Gold (English), Gold(German), Guld (Danish), Gulden (Dutch), Goud (Afrikaans), Gull (Norwegian) and Kulta (Finnish).

How much gold is there in the world?

The World Gold Council estimates that at the end of 2001, it is estimated that all the gold ever mined amounted to about 145,000 tonnes.

Who owns most gold?

If we take national gold reserves, then most gold is owned by the USA followed by Germany and the IMF. If we include jewellery ownership, then India is the largest repository of gold in terms of total gold within the national boundaries. In terms of personal ownership, it is not known who owns the most, but is possibly a member of a ruling royal family in the East.

 

 

§                                                                                 what is Hallmark in gold and how does it work?

§                                                                                 What is dirty gold?

If gold is laid around the world, how far would it stretch?

If we make all the gold ever produced into a thin wire of 5 microns (millionths of a metre) diameter - the finest one can draw a gold wire, then all the gold would stretch around the circumference of the world an astounding 7.2 million times approximately!

Why is gold measured in carats?

This stems back to ancient times in the Mediterranean /Middle East, when a carat became used as a measure of the purity of gold alloys (see next Question 5). The purity of gold is now measured also in terms if fineness, i.e parts per thousand. Thus 18 carats is 18/24th of 1000 parts = 750 fineness.

What is Carat?

A Carat (Karat in USA & Germany) was originally a unit of mass (weight) based on the Carob seed or bean used by ancient merchants in the Middle East. The Carob seed is from the Carob or locust bean tree. The carat is still used as such for the weight of gem stones (1 carat is about 200 mg). For gold, it has come to be used for measuring the purity of gold where pure gold is defined as 24 carats.

How does a gold mine work?

The gold-containing ore has to be dug from the surface or blasted from the rock face underground. This is then hauled to the surface and milled to release the gold. The gold is then separated from the rock (gangue) by techniques such as flotation, smelted to a gold-rich doré and cast into bars. These are then refined to gold bars by the Miller chlorination process to a purity of 99.5%. If higher purity is needed or platinum group metal contaminants are present, this gold is further refined by the Wohlwill electrlytic process to 99.9% purity.

What happens to gold after it is mined?

The ore is normally sent to a refinery, which will extract and melt down the gold into a pure 24ct form, normally as bars or ingots.

How big is a tonne of gold?

Gold is traditionally weighed in Troy Ounces (31.1035 grammes). With the density of gold at 19.32 g/cm3, a troy ounce of gold would have a volume of 1.61 cm3. A metric tonne (equals 1,000kg = 32,150.72 troy ounces) of gold would therefore have a volume of 51,762 cm3 (i.e. 1.61 x 32,150.72), which would be equivalent to a cube of side 37.27cm (Approx. 1' 3'').

What percentage of gold is used in jewellery, industry and investment?

Around 70% of gold demand is jewellery, 11% is industrial (dental, electronics) and 13% is investment (institutional and individual, bars & coins). Gold jewellery has strong "investment" attributes in all countries, and in markets such as India and Middle East is sold by weight at the prevailing daily rate with a supplementary "making charge" which varies according to the complexity of the piece.

what is Hallmark in gold and how does it work?

Are you looking for purity when you purchase the gold jewellery? If so, ensure that you buy the precious metals like gold and diamond, hallmarked by the Bureau of Indian Standards.

But what is Hallmark and how does it work?

Here is all you need to know about Hallmarking of Gold.

What is Hallmark?

Hallmark has been acting as a safeguard to purchasers of gold and gold articles for centuries in various countries. In simple terms, Hallmark is a purity certification of gold articles in accordance with Indian Standard specifications.

Gold articles are evaluated and tested at an official Assaying and Hallmarking Centre and then certified that the metal used conforms to the national and international standard of fineness and purity.

Who provides the Hallmark in India?

The Bureau of Indian Standards (BIS), the country'a apex standards body, is involved in the development of technical standards (popularly known as Indian Standards), product quality and management system certifications and consumer affairs in all matters concerning Standardization, Certification and Quality.

The BIS Hallmarking Scheme has been aligned with International criteria on hallmarking (Vienna Convention 1972). As per this scheme, licence is granted to the jewellers by BIS under Product Certification Scheme. The BIS certified jewellers can get their jewellery hallmarked from any of the BIS recognized Assaying and Hallmarking Centre.

What does Hallmark consist of?

Hallmark consists of five components i.e. BIS Mark, the Fineness number (corresponding to given caratage), Assaying and Hallmarking Centre's Mark, Jeweller's Mark and year of Makring denoted by a code letter and decided by BIS (e.g. code letter `A' was approved by BIS for year 2000, `B' being used for the year 2001 and `C' for 2002). The marking is done either using punches or laser marking machine.

The BIS hallmark, a mark of conformity widely accepted by the consumer, bestows the additional confidence to the consumer on the purity of gold jewellery.

How does the Hallmarking Scheme operate?

As per this scheme the jewellery retailer/manufacturer desirous of obtaining a licence apply to BIS for use of Standard Mark (Hallmark) on their jewellery. After registration, BIS officials conduct a preliminary inspection for verification of premises retailing/manufacturing, testing facilities and competence of testing personnel. A sample is drawn from the jewellers retail/manufacturing premises for independent testing. Based on the satisfactory preliminary inspection report and test report of the sample drawn during inspection, licence is granted to the jeweller.

What happens after a jeweler gets the license?

After getting the licence, the jeweller (retailer/manufacturer) has to follow a BIS approved Scheme of Testing and Inspection on a continuing basis to have confidence in the homogeneity and purity of the gold jewellery offered for hallmarking. A BIS certified jewellers (retailer/manufacturers) has right to register himself with any of the BIS recognized Assaying and Hallmarking Centres to get his jewellery hallmarked. BIS maintains surveillance on the certified jewellers, at a defined periodicity. Market surveillance involves collection of hallmarked gold jewellery from licensee's retail outlet/manufacturing premises and having it tested for conformity in BIS recognized Hallmarking Centre.

Can BIS cancel the Hallmarking license?

Yes. Deviations in degree of purity of fine metal and observance of operations not in conformance to the system may result in cancellation of BIS licence, and invoke legal proceedings for penalties under the BIS Act, Rules and Regulations.

What are the main objectives of Assaying and Hallmarking system?

The principal objective of assaying and hallmarking is to protect a consumer against victimization of irregular gold quality. Besides consumer satisfaction, hallmarking helps to create an export competitiveness of gold jewellery industry thus provide strong impetus for gold jewellery exports.

In addition, it develops gold based financial products that will help in mopping up the vast dormant gold resources lying with the household sector. It also helps develop India as a leading gold market centre in the world commensurate with its status as the topmost consumer.

What are the benefits of certified jewelers?

The jewelers with BIS license of Hallmark Gold Jewellery provide clear indication of their capabilities, strong evidence of their commitment to quality, assurance of consistence in purity and quality of gold jewellery.

It provides opportunity is to describe the way they maintain their standards for quality control and later demonstrate that they consistently do what they claim. It provides international competitiveness and enhanced customer satisfaction. It also provides third-party assurance & satisfaction that they have got the right purity of gold for the given price and protection against victimization of irregular gold quality/purity.

What is dirty gold?

"Dirty" gold is a reference made by lobbyists, mainly NGOs (non-governmental organisations) such as Earthworks and Oxfam USA, who aim to promote improvements in social and environmental aspects of gold mining (often referred to as "Sustainable Development").

The gold mining industry takes its Sustainable Development activities very seriously and there are many strict regulations and guidelines for mining of gold. Most mining companies have robust environmental, social and ethical standards and report on these through their annual reports.

Recently (in June 2006) a multi-stakeholder group conducted a dialogue in Vancouver to discuss options for developing a system of independent 3rd party assurance for mining.

As a result of this dialogue, the "Responsible Mining Assurance Initiative" has been established by a group of mining companies (e.g. Newmont and AngloGold Ashanti), retailers (e.g. Cartier, Tiffany, WalMart and Signet Group), non-government organisations (e.g. Earthworks, who helped establish the "dirty" gold campaign) and trade associations (e.g. Jewelers of America, ICMM and CRJP) to further develop options for independent third-party assurance in the mining sector.

A coordinating committee drawn from the group will facilitate a process for the identification of responsible mining standards and a governance model for the assurance system, and has set a goal of establishing initial standards and a system for governance by 2007.

When was gold jewellery first worn by people?

Until recently the earliest known gold jewellery was believed to date from the Sumer civilisation, which inhabited what is now southern Iraq around 3000 BC. Recent discoveries suggest however that goldsmithing first began on the shores of the Black Sea, in the land that is today Bulgaria (for more information Pointe-à-Callière museum of Montréal).

Articles displaying various techniques such as repousse, chain- making, alloying and casting have been found in ancient Egyptian tombs, with the best known examples coming from the treasures of King Tutankhamun who died in 1352 BC. The Minoans on Crete produced the first known cable chain, still very popular today, and the Etruscans in Italy had developed granulation, whereby items are decorated with tiny granules of gold, by the 7th century BC.

Why do people wear gold jewellery?

Wearing gold not only enhances strong emotional feelings for its wearer but also completes a woman's appearance - it makes women feel indulgent, beautiful, successful, confident and sexy. Women who wear gold jewellery consider it to be an integral part of their appearance, and consider it as a necessary item rather than just an accessory. There are also traditional reasons for wearing gold, such as for marriage, religion, and family gifting.

Gold also has a lasting financial value, which supports consumers' decision when buying gold jewellery, and can often be the reason why women prefer gold to other jewellery or luxury products.

What is the carat (karat) system for gold jewellery?

The proportion of gold in jewellery is measured on the carat (or karat) scale. The word carat comes from the carob seed, which was originally used to balance scales in Oriental bazaars. Pure gold is designated 24 carat, which compares with the "fineness" by which gold is defined; 18 carat gold is defined as 75% pure gold.

What is the difference between red, yellow and white gold?

Pure gold is yellow in colour, but when gold is alloyed with other metals it is possible to use these alloys to produce varying colours of gold. Gold alloys are usually a mixture of silver, copper, and zinc, and the amounts of each can be varied to affect the final colour, normally white and red gold.

Can I tell where the gold in my jewellery was sourced?

At present, it is not possible to tell which mine or country the gold in a jewellery item was sourced from. Gold jewellery is made from gold from a number of sources, with the most important being gold mining which accounts for around 2/3rds of gold supply.

The rest comes from recycling (old jewellery, bars, coins and industrial recycling, often referred to as "scrap"), which is around 20% of gold supply, and from stocks of gold bullion held by banks, which is around 13% of supply.

Can I find out where my gold jewellery was manufactured?

Depending on the country that your gold jewellery was purchased in you may be able to tell where the gold jewellery was manufactured from the hallmarking on the item.

Hallmarking is only a legal requirement in some countries, for example the United Kingdom. In other countries hallmarking is done voluntarily, and in others is not carried out at all. In countries where hallmarking is carried out, small symbols are made to the item which identifies information such as caratage, country of manufacture and company that manufactured it.

The extent of the information available from the hallmark depends on the hallmarking standards of the country that the jewellery was purchased in.

What is recycled jewellery?

Approximately one fifth of total gold supply comes from "recycled" gold. This can be old gold items, for example gold jewellery, bars, coins and industrial items, which are melted down and re-formed into new gold items. "Recycled" gold is often referred to as "scrap".

Of total world gold jewellery production, approximately one quarter is made from "recycled" gold jewellery. Because gold manufacturing uses gold from multiple sources, it is not possible to identify whether an item of gold jewellery is made from recycled or new gold.

Will gold price crash in India?

Is the price of gold, which has hit an all-time high, set for a crash?
On Tuesday, bear fever gripped the gold market as traders and dealers
said that they are expecting a crash in the prices of gold in the
Indian bullion market.

Gold had hit an all-time high of Rs 11,492 on the Multi Commodity
Exchange, the largest commodity bourse. The gold contract has gone up
more than 7 per cent so far in 2008.

Traders said the demand for gold is dull, as many people are
expecting that the prices will come down.

Overseas gold touched an all-time high of $914 an ounce on Monday on
investor buying driven by the dollar's slide and financial market
turmoil.

Bombay Bullion Association said that India's imports of gold in
calendar year 2007 could have fallen by 20 percent due to a surge in
prices. In 2006, India, the world's largest consumer of the precious
metal, imported about 715 tonnes of gold.

The country consumes anywhere between 600 to 700 tonnes of gold worth
$6-7 billion annually. But domestic production of gold is only about 2
tonnes per annum. The consultancy said the net gold de-hedging in the
second half of 2007 will be between 1.5 million and 2.5 million oz
globally.

And, who usurps all this gold in India. Mainly the gems and jewellery
industry, which is competitive in the world market due to its low cost
of production and availability of skilled labour. In addition, the
industry has a worldwide distribution network, which has been
established over a period of time.

The strengthening of rupee against US dollar and rising consumer
spending have raised India's gold demand by as much as 72 per cent in
the first half of the last year. A report from the World Gold Council
says demand for gold in India reached an all-time high of 317 tonnes
in the second quarter of 2007. The figures are nearly double of what
was sold in 2006 and equal to half the global mined output for the
same period. Of this, only 10-15 per cent was recycled gold,
indicating strong demand for fresh imports.

Latest reports say India has emerged as the fourth-largest merchandise
gold export market for Australia in 2006-07. Gold exports comprise
nearly half of all merchandise exports to India from Australia, says a
report from the Australia India Business Council. It said in 2006-07
India was Australia's largest market for gold, second-largest market
for coal and copper ore, and third-largest market for wool. Australia
has also agreed to allow the export of uranium to India, subject to
strict conditions. Australian exports to India rose 37 per cent in
2006-07 as against 22 per cent in 2005-06. Last year, merchandise
exports from Australia to India were worth AU$10.1 billion, up AU$2.7
billion.