Gold Forecaster
- Global Watch
Indian demand... Gold...
Iran
Julian D.W.
Phillips
April 25, 2006
Excerpts
from "Gold Forecaster - Global Watch."
Indian Demand
We have been waiting
for what seems to be a long period for Indian demand for gold
to return to the global market. India imports around 75% of the
gold that is "consumed" there. But for the last six
months imports have been down to close to zero in the fourth
quarter of last year and the first quarter of this year. The
recent wedding season demand was extremely low this year. There
has been about 33% drop in Mumbai's daily gold consumption to
0.5 - 0.6 tonnes per day from a normal 0.8 - 0.9 tonnes per day
around this time of the year. But last year was an unusual year,
as demand had resumed after prices stabilised at higher levels.
Doing that shows that demand has returned to roughly normal.
This was the opinion of the World Gold Council.
But now there is some demand
as the date for "Akshaya Tritya" approaches. Akshaya
Tritya is a day considered by the Hindus as an auspicious period
for the purchase of gold as an expression of measure of wealth
and happiness. Since time immemorial the custom of gold buying
during this period has been followed. Everybody following Hindu
customs would buy at least 1 or 2 gram of Gold on that day as
a token and some would buy more. If we restrict this to a family
of 4 buying this amount and consider that there will be around
200 million Hindu families in India [Hindu India has a population
of 861 million] buying this quantity of gold, we could see a
major off-take of 200 tonnes or thereabouts. With inventories
having been run down heavily over the last six months and scrap
sales dropping off recently, much of this demand would have to
be supplied from newly imported gold.
Gold's seasons
Akshaya Tritya
this year is on the 30th of April 2006. Based on the Lunar calendar
this date changes every year. Normally Akshaya Tritya falls on
the 18th day of the second Hindu month called Vaisakh. In the
Hindu calendar there are 12 months with none of them having more
than 30 days each. Once in every four years the year is made
of 13 months. Normally Akshaya tritya falls in the last week
of April up to mid-May. And this is a peak period of gold demand
for India, followed by a 35 - 40 day period of little demand
[except unrelated investment demand] when the harvest income
comes into the hands of the farming peasants. Thereafter, from
July 31st, until the last week of October/the first week of November,
gold hits the doldrums of little to no demand. Fortunately for
gold from mid-August Europe's gold market comes back to life,
after their summer holidays.
India's new
gold Investors
We are receiving
reports that there is a change in the pattern of gold buying
in India as India's appetite for gold bars is rising at a faster
rate than the growth in jewellery, according to the President
of the Bombay Bullion Association. We have mentioned the general
increase in the wealth of the Indian middle class who also view
gold as a good investment, which it has proved for all these
ones.
Jewellery accounts for the
biggest part of India's gold demand, often given by parents at
weddings to give their daughters financial security. Hindus also
consider gold an "auspicious" metal and like to buy
or give it during religious festivals.
Iran, gold and
fear of the future
Facing a potential
war, possible sanctions and the vilification by the rest of the
world the Iranian man-in-the-street and Investor has few reliable
places to go. So he's turning to gold just as so many people
in other parts of the world are. But his situation is one moving
from the possibility of structural ruptures to probable structural
ruptures. One newspaper put it this way, when referring to gold
"It's unbelievable, it seems no investment field is as safe."
But the Iranian people need gold in small quantities in coin
form. The quote from another newspaper there was, "Gold
coins are Iranians' political hedge fund. We keep them at home
and they make us feel secure."
Gold coins are now given as
presents at weddings and for the New Year. Gold coins are a liquid
and proven investment and at 460,000 Rials (about $41.50) a quarter,
gold coins are within the reach of all but the poorest Iranian.
The
alternative investment route, Iran's largely state-owned banking
sector offers limited services, while all Iranians face inflation
put 'officially' at 14%. And the 'acid test' investors measure
by showed deposits in the state banks lost 1% in real terms in
the year to February 2006 whilst Gold coins gained 21%.
"Buying gold coins reflects
a lack of alternatives," says Mr Pourian. "Big investors
may pull out of real estate and move their capital to Dubai.
Smaller investors have fewer opportunities."
This is what can happen
when confidence in the financial institutions and the economy
of a country falls!
April 21, 2006
-Julian
D.W. Phillips
email: gold-authenticmoney@iafrica.com
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