INDIA, THE GOLDEN BIRD

Gold demand surges to a new high in India

MUMBAI: The obsession of Indians with the yellow metal scaled a new peak in 2005. Interestingly, this surge came at a time when the price of gold in the domestic market was also soaring to a new high. In rupee terms, demand grew at 25% over 2004. In India, the demand for gold as an investment option grew at 34% over 2004. This indicates that increasingly Indians are accepting gold as an investment option. Compared to this, the jewellery segment witnessed a 14% growth, said the World Gold Council. Last year, while countries barely managed to clock double-digit growth in demand, India recorded a 17% rise over that in 2004, the highest by any country. India consumed nearly 725 tonnes of gold in 2005, compared to 618 tonne in 2004. Although global growth was just 7% in 2005, for the first time sales crossed the $50 billion mark. US, India's nearest rival in terms of demand, consumed 382 tonne while for China the figure was 293 tonne.

ISRAEL

1. India: overall consumer demand in India in 2005 was 17 percent higher in weight than the year before. In rupees, this was equivalent to a 25 percent increase bringing the value of gold demand in India to a second successive annual record.


2. Jewelry demand also experienced a second successive annual record of over 20 percent in rupees. This translated to an increase of 14 percent in tonnage terms, totaling 589 tons

 

1. China, Hong Kong & Taiwan: The buoyant Chinese economy and the success of the K-gold (18K gold often with Italian-inspired design), jewelry promotion saw consumer demand in Mainland China rise by 8 percent in weight last year, with an 8 percent increase in jewelry off take and a 20 percent rise in net retail investment.


2. Demand for jewelry in the fourth quarter was less affected by the sharp rise in the price than some other countries and buying in Q4 was higher than Q4 2004, in part because the rising price favored the investment motive for buying jewelry, in particular the traditional 24 carat pieces.


3. Throughout the year, growth in K-gold grew rapidly, with its share of the total market rising from 12 percent to around 15 percent although the winter months have experienced the usual slow-down for this category.

 

1. UAE and the Gulf: the booming economy, high tourist numbers, heavy trade and sustained WGC promotion led to an 8 percent increase in jewelry demand in the UAE over the year as a whole despite a fall in the fourth quarter. Jewelry buying in the rest of the Gulf region was 5 percent higher in 2005 compared to 2004 with the price rise in the fourth quarter having only a limited impact on buying.

 

1. Saudi Arabia: Saudi Arabia showed the strongest growth in the Middle East with jewelry demand rising by 12 percent and overall demand by 13 percent during the year. The effect of a strong economic backdrop and a relaxation of Saudi-isation rules for jewelry shops, which can now employ one foreign worker per outlet, and a liberalization of rules on imported jewelry and jewelry exhibitions contributed to this rise.


2. The impact of the price rise in the fourth quarter affected Saudi Arabia less than the rest of the region with jewelry demand dropping by just 3 percent compared to the fourth quarter in 2004.

 

1. U.S.: In tonnage terms, US jewelry demand in 2005 was slightly higher than in 2004 – the first year since 2001 not to show a decline. The retail value of items purchased is expected to have risen by 5 percent, the highest growth rate of the past four years.


2. Yellow gold is increasingly the driver of gold sales. As throughout 2005, the more innovative jewelers, in both the fashion and mass-market sectors, are performing well. Market research carried out towards the end of 2005 showed positive shifts in sentiment towards gold jewelry and in future purchasing intent.

South Africa
GLOBAL demand for gold climbed to $53.6bn in 2005, a 17% increase over the previous year, the World Gold Council (WGC) said in a report.Demand was fuelled by India, China, the US and the Middle East, it said. Gold demand in Europe, however, was unchanged and actually fell in Britain.

These are the figures from three different news networks, first one from TNN India, other one from Israel and third one from South Africa. What does this news suggest to you?
Well this news clearly indicates that the middle income group of India which in itself is bigger than many nations in number and in terms of economy is spreading its wings. Various news networks and few specialists feel that India is bit sensitive market, where the price fluctuation can create bit upset. But I feel otherwise. The budget is soon going to be floored for 2006, and the projected rate of development for India is pegged around 8%. This means that the power which runs this country India, I mean to say the middle class is going to flap its wings more powerfully.
India on other hand is a low key in terms of production. India is undoubtly is once again on the path of  being the golden bird of whole world. But Indian companies must come out of their tunnel vision and must explore for more gold in India. In India 12 blocks have been identified for exploration. Modern technology, and modern vigor should play great role in future exploration.