Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will India Stop Buying Gold?

Commodities / Gold and Silver 2012 Mar 30, 2012 - 10:04 AM GMT

By: Jeff_Clark

Commodities

Best Financial Markets Analysis ArticleJeff Clark, Casey Research : We've read mixed reports about how lofty gold and silver prices are affecting demand in India. One month we're told demand is up, and the next it's supposedly down. I'm not suggesting that official reports are inaccurate, but it is admittedly confusing and doesn't help us understand the real trend in the country.


Why should we care about the gold market in India? Well, let's face it; the nation is one of the biggest consumers of the metal, a major driver that can give us hints about demand and investment trends, along with what to perhaps eventually expect here in North America. But reading third-party reports about India is very different than getting information firsthand from a credible source in the country. I wanted to get to the bottom of what's really going on in India by talking to a reputable bullion dealer who could give me the inside scoop, an up-to-the-moment dispatch from the front lines, as it were. So I did just that.

Ashish and Rashmi Sand own Savio Jewellery (Savio means "shine" in Italian), a design studio and jewelry factory in Jaipur, India. They've received many design and manufacturing awards since starting their business six years ago, winning five awards in just the past six months. They source gold from bullion agents in Jaipur, who in turn obtain it from dealers in Hong Kong, Dubai, Mumbai, and Delhi. They have industry contacts, friends, and relatives that span the globe, from the US and UK to Asia and Australia. If anybody knows what's happening in the physical gold and silver bullion markets and the Indian jewelry market, it's them.

In this exclusive interview, you can read what Ashish and Rashmi told me about unstoppable demand, growing silver interest, budding demand for coins and bars, reduced selling, shifting trends with women, burgeoning ETFs, and why they believe a bubble is headed our way…

Jeff Clark: Ashish, tell us about your manufacturing facility and design studio.

Ashish: Savio Jewellery makes conceptual jewelry, which can be worn in five or six different ways. It looks "heavy" but is extremely lightweight. It's also affordable.

We design what you want, for as much as you want to spend. For instance, one of my customers wanted a necklace and earring set for her daughter's wedding; based on their budget, we were able to manufacture a set using 35 grams of gold [about 1.2 ounces].

Jeff: Do you have any difficulties sourcing metal?

Ashish: We don't face any difficulties in arranging gold, whether demand is high or low, because the traders hedge gold on daily basis. We also keep a reserve of gold so that our manufacturing doesn't slow down if metal isn't immediately available. Our suppliers of gold don't face any problem procuring gold, either.

Jeff: How would you describe demand for gold right now in India?

Ashish: We are seeing several shifts in the trends for gold demand. First, even with the increase in price, demand is still strong. People have not stopped buying. Part of this is cultural; wearing gold jewelry in a wedding is a longstanding custom in India and will not change regardless of price.

In fact, our shops are experiencing increased buying in spite of higher prices. Previously we would have one or two customers per day for gold, but now we have five or six. We are getting plenty of new customers, and see new customers more frequently now.

Second, I would say that awareness among customers has increased. Now they see jewelry also as an investment and want a proper return on their investment. Further, due to fluctuations in price, they may book in advance – i.e., if a customer orders a jewelry product, they lock in the gold price ahead of time.

Probably the biggest change we face, though, is that customers are more focused on getting lightweight jewelry, or 14-carat gold instead of 18-carat gold. This is due to the high gold price. This adjustment, however, has not affected the desire to own gold.

The bottom line is that the rise in the gold price has not hampered demand.

Jeff: Are Indians investing more in bullion (bars and coins) than usual?

Ashish: Indians are definitely investing more in bullion due to the rising trend in gold and silver prices. Investing in gold and silver has always been a good idea for wealth protection to Indians, and now we are seeing them buy more coins and bars than they used to. Coins and bars are mainly purchased either in wedding season or during the Diwali festival. Even I purchase gold coins every Diwali – 10 grams, 20 grams, or any amount.

Another factor is that India has experienced many monsoons over the last two years, and the farmers are tending to invest their savings in gold and silver. This is a major factor for the increase in demand for coins and bars.

Jeff: Is much reselling taking place right now? Is it higher or lower than it used to be?

Ashish: Reselling gold has become rare – and this from a country that consumes more gold than any other and where gold jewelry is a central part of the culture. We rarely have customers who sell back their gold or silver. Before we used to have customers who would sell their scrap gold and make new jewelry from it, but now we don't experience many such customers. I would estimate we currently have 90% buyers and 10% sellers, and before the ratio was 80% buyers and 20% sellers.

They're not selling, because they hope that in the next few years the price will rise further and they can get better returns than what they can at present. Just a few years ago, some customers would buy gold expecting to sell when the price rose; now those customers are sure gold will keep rising year after year and are selling only rarely.

Jeff: We've read about an increased interest in silver in India – tell us what you see.

Ashish: Silver demand has increased sharply in recent years, as increasing numbers of investors use silver as a store of value. Customers are also buying silver to hedge against market losses. While global markets have been uncertain over the past four years, silver has provided huge returns and has been an ideal investment. Because silver has provided the highest recent return of all the commodities, this has attracted the average layman.

Silver demand has also increased for the customer for whom the gold price is out of reach. Nowadays, if they cannot afford gold, they switch to silver. So the number of customers requesting silver has increased.

Silver is also part of gift-giving in India. It is customary to give silver items as a wedding gift, and there are rituals where parents gift silver dinner sets to their daughters at their weddings. In addition to dinner sets, silver is usually found in jewelry, such as a necklace, earring, bracelet, or rings; gift items such as glass sets and crafted boxes; and even showpiece furniture.

Last, there is a steep rise in demand for silver in electronic goods.

Jeff: Rashmi, describe how Indian women view gold. And have you noticed any changes in how they view silver?

Rashmi: Gold and silver are firmly embedded in cultural and religious traditions for Indian women. Over the past decade, Diwali and Akshaya Tritiya have become major gold- and silver-buying occasions in India. Gold and silver also play an important role in the marriage ceremony, where brides are often adorned from head to toe in gold jewelry. This reminds me of my own wedding.

So during wedding season, the demand for gold and silver increases. Our women customers prefer lightweight jewelry instead of heavy and bulky ornaments. Increasingly, it also appears they now prefer workmanship over weight when choosing jewelry made from gold. The Indian custom of women wearing jewelry has not changed, though they have started accepting 14 carat gold in order to make it more pocketbook friendly. And people in India wear jewelry to all kinds of parties.

We have also experienced an increased number of women customers in our shop. They still buy gold and silver jewelry, but now they prefer jewelry that is of designer quality and looks good. This is the biggest change I have noticed with women over the past few years; they want jewelry that is unique. They prefer wearing long earrings – danglers or hoops.

They also prefer multipurpose or conceptual jewelry – in other words, jewelry that can be worn in different ways. This attracts the woman customer, as they think they have more jewelry for the same price.

There is a different culture in south India, where the people are more bound to gold jewelry than silver. The parents still focus on giving gold to their daughters for a wedding present. Each part of India has different customs, but the one thing that remains common is that gold jewelry is bought by everyone for weddings.

Jeff: Ashish, you've stated you are very bullish on the price of gold and silver, and that a bubble for prices is ahead; why?

Ashish: To be clear, we are extremely bullish on the price of silver and gold. We believe that both will eventually advance into a full-fledged bubble that will surpass most investors' wildest dreams.

The world is changing and so is the way we invest. Gold and silver were once considered a marginal investment, worn mostly as jewelry or something that was stored in banks. Now it is making a comeback and has become a primary investment asset for many individuals and institutions.

In India, people are very futuristic and are so bound to the culture that they're buying gold and silver in advance. If they know that they are going to marry their daughter in three to four years, for example, they will purchase the gold now instead of waiting when prices will be higher. This will continue to underpin demand and push the price higher.

Jeff: Any other trends you see in India?

Ashish: From the average layman to the high-class educated person, they now want to invest in gold and silver. In fact, those who were investing in equities have been switching to gold and silver. Even the gold and silver ETF has become common in India. This is partly due to rising prices; keeping metal at home has become riskier, so they can avoid the risks of self-storage by using an ETF.

Even I have invested in gold and silver for my personal use apart from my business. Instead of buying equities, I now invest more in gold and silver, with the expectation of getting a good return.

I will conclude by just saying that based on what we see here every day, we believe gold and silver prices will continue to go up.

Jeff: Thanks, Ashish and Rashmi.

[For more on developing trends in gold and silver, download the free Casey Research 2012 Gold Investor's Guide. Reading it will help you refine your precious-metals investment strategy and increase your wealth.]

© 2012 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in