Out of India

By: Rob Kirby | Tue, Oct 24, 2006
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How many of you have read or heard about Jewelry - particularly in India - being the be-all-and-end-all driver determining the price of gold? Buying of gold jewelry at this time of year is traditionally associated with a festival known as Diwali.

A couple of evenings ago, in the daily Midas commentary at Lemetropolecafe [anyone can follow the link and get a "free" two week trial subscription] I read a snippet of this account, referencing a popular essayist published at another Gold Bug Site,

"India is just now seeing significant jewelry buying for their wedding and holiday season. This is gold bullish normally, but has not been enough to overcome speculative unwinding into any gold rallies. There is a lot more of this unwinding waiting to happen as well. I find it hard to understand how much this particular issue of speculative unwinding is being underestimated by the gold community. Last month there was a $5 billion out flow from gold paper by speculators. There is still a great deal of this kind of position to kunwind should that be the desire of funds.

If seasonal jewelry buying at a normally bullish part of the year is failing to rally gold much, what do you think is going to happen after that is finished?"

If I had a nickel for every time I've either read or heard this "popular belief" about jewelry demand and India, I'd be retired already.

Just goes to show you, no one is foolish with their nickel these days, ehhh? The stuff is clearly too expensive!

But I digress.

A piece that ran in the Times of India last week, I thought some of you might find it interesting:

Biscuits in, bracelets out in Diwali gold rush
[18 Oct, 2006 0350hrs IST TIMES NEWS NETWORK]

SURAT/AHMEDABAD: It is gold rush of a raw form. Banks and jewelers across the state are witnessing a huge demand for gold biscuits and coins this festive season. Jewellery, however, is not on the shopping list this Diwali.

Forget wearing ornaments. The yellow metal has become just a lucrative investment option for the Gujaratis. As gold prices have crashed by 15 per cent in last two months, the bullion market has witnessed a spurt in demand with daily off-take increasing from 500 kg to 1,000 kg a day in Gujarat, said Monal Thakkar of Amprali Industries, a leading bullion firm.

No wonder ICICI Bank, which sells gold coins of different sizes, has also witnessed a two-fold rise in its retail sales, according to Girish Venkat, head, ICICI Bank region.

"People used to buy jewellery for Diwali but this time they are buying only gold coins, biscuits and bars," said Girish Choksi, a leading bullion merchant and past president Manekchowk Choksi Mahajan.

Although there is huge demand for gold in the domestic market, leading commodity analysts have indicated declining trend in gold prices in the international market as funds have slowed down on buying gold.

Besides, gold has been moving in tandem with crude prices which are also declining. Anupam Kaushik, vicepresident, Anagram Comtrade, said gold price in the international market is around $596 per ounce and market is not accepting higher levels.

According to Prakash Shah, owner of a jewellery store in Athwalines of Surat, the dip in gold prices is bringing customers by the hordes to his shop.

"My jewellery counters are empty but my coins and biscuit counters are crowded," says Shah who expects to sell nearly 1.5 kg of gold on Dhanteras later this week. Jayprakash Soni, another jeweller at Parle Point, said the gold sales had risen by nearly 40 per cent compared to last year.

Take special note of the TITLE of this article: Biscuits in, bracelets out in Diwali gold rush.

I found it interesting to discover that a new class of savvy Indian investors now FAVOR gold biscuits [bullion] to gold jewelry!

The reason for this change in preference is that while the Indian population has always found gold a desirable INVESTMENT, they are becoming increasingly loathed to pay the premium associated with owning jewelry as an investment. Put simply, coins and bullion bars are "cheaper per ounce" to purchase than jewelry.

With it being such a "given" that jewelry demand is so widely believed to be of paramount importance in determining global gold demand - this is an IMPORTANT DEVELOPMENT - isn't it?

Now, take a look at how the WORLD GOLD COUNCIL CHANGED THE TITLE of this same article;

Jewellery News

Gold biscuits and coins popular in India
09:43:58 GMT, 18 October, 2006

Gold biscuits and coins have replaced jewellery as the gift of choice during the Diwali festival in India, say industry experts.

Monal Thakkar of bullion firm Amprali Industries has stated that a surge of demand is affecting the bullion market with 1,000 kg of gold being purchased a day in Gujarat, a 100 per cent increase on the past few months.

Allied to this, jewellery store owner Prakash Shah from Athwalines, Surat, has asserted his belief that the decrease in gold prices recently is attracting many customers to his store and it is gold coins and biscuits that are proving the most popular with customers.

Mr Shah told the Times of India: "My jewellery counters are empty but my coins and biscuit counters are crowded."

This scenario was affirmed by bullion merchant Girish Choksi, who, according to the Times of India, stated: "People used to buy jewellery for Diwali but this time they are buying only gold coins, biscuits and bars."

Diwali, also known as the festival of light, has long seen an increase in the demand for gold as it is traditionally given as a gift during the festival season.

©Adfero Limited

Why would any of you suppose the WORLD GOLD COUNCIL would want to REWRITE the title of a legitimate, important story?

The altered headline changes the tenor of the article - doesn't it?

Or more accurately, why would the World Gold Council rely on a third party [Adfero Limited] to provide CLEARLY MASSAGED CONTENT to their own web site? After all, the World Gold Council has gone to the expense of opening and maintaining an office in India, all funded by the generosity of the world's gold producers - haven't they?

World Gold Council Offices:
Regional Office & USA
444 Madison Avenue
New York, NY 10022
Tel. +1.212.317.3800
Fax. +1.212.688.0410
Far East
Regional Office & Singapore
9 Raffles Place
Level 57 Republic Plaza
Singapore 048619
Tel: +65.6823.1510
Fax: +65.6823.1410
China (Beijing Office)
Room 1706, SciTech Tower
22 Jian Guo Men Wai Dajie
Beijing, 100 004
Tel. +86.10.6515.8811
Fax. +86.10.6522.7587
China (Shanghai Office)
Unit 3504, 35th Floor, Plaza 66
1266 Nan Jing Road (West)
Shanghai, 200040
TEL: +86.21.6289.2111
Fax: +86.21.6289.3222
Shin Aoyama Building / E19F
1-1-1 Minami-Aoyama
Minato-ku, Tokyo 107-0062
Tel. +81.3.3402.4811
Fax. +81.3.3423.3803
Middle East
Regional Office & UAE
Dubai World Trade Centre
P.O. Box 9209 - Level 28
Dubai, United Arab Emirates
Tel. +971.4.3314.500
Fax. +971.4.3315.514
e-mail: gold@wgcdubai.org.ae
Nisbetiye Mahallesi
Belediye Sitesi
A4 Blok, No. 21
Tel: +90.212.351.6915
Fax: +90.212.351.6916
Regional Office & India
(Mumbai Office)

15th floor, Jolly Maker Chambers 2,
225 Nariman Point,
Mumbai - 400021
Tel : +91.22.5630.8844
Fax : +91.22.5630.8845
India (Chennai Office)
B-2 Alexander Square
34/35 Sardar Patel Road
Chennai 600 032
Tel. +
Fax. +

Does this sound like a conspiracy, or more accurately eerily similar to the "broken record" of obfuscation - where anything relating to gold is concerned - as practiced by the U.S. Treasury and the Federal Reserve?

The World Gold Council - with offices world wide; is it credible that they could miss such a chance to HIGHLIGHT a fundamental shift in demand?

This becomes even more confusing [or perhaps not?] when one considers an Oct. 23, 2006 article by Resource Investor's [RI] Jon Nones, where he reports,

"Paul Walker, President of GFMS, the gold consultancy firm who supplies the data for [World Gold Council] WGC, told RI there is a major secular shift to investment in coin and bar form from jewellery in India."

So they - the WGC, had to know - right?

What is the World Gold Council Really Up To?

What I find bothersome about all of this is when I go the The World Gold Council's web site - aside from touting themselves as the world's advocate for gold; this is the banner that greets me:

The Definitive Site for Gold - investment intelligence, innovative gold science & stunning jewellery trends.

You see folks, as far back as 2001 - The World Gold Council has been afforded an annual budget of as much as 55 Million Euros. Nowadays, their budget is rumored to be in the range of 80 million per year. By viewing the homepage of their website - it's more than clear that they do little more than push the virtues of gold as jewelry.

What ever else they are doing, it sure seems to involve efforts to marginalize the importance of investment demand and detract from [misdirect or ignore] deserved attention to well documented Central Bank activity in the gold market.



Rob Kirby

Author: Rob Kirby

Rob Kirby
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