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Gold bullion dealers &
Gold trade - By Annie Zaidi
Gold bullion is prized even in the age of demat trading and plastic
money, because of its inherent quality as the original currency for
trading, and therefore, a symbol of financial security. Paper money has
been known to become worthless in a matter of days and stocks, in a
matter of hours. But gold hardly loses its glitter.
Since the 1980s, the perception of gold has slowly changed from an asset
that must be hoarded to guard against a rainy day, to a commodity that
can be traded.
Some analysts believe that the demand for gold is linked with economic
prosperity, since gold is used as jewelry. Others link the price of gold
bullion to oil prices.
Recently, the greatest demand comes from Asia. India is the world’s
largest consumer of gold, importing over 840 tonnes annually.
Metros like Mumbai account
for 200 to 500 kilos of daily gold imports in the high season. But
60-70% of gold is purchased in rural areas. Gold Bullion dealers say
this is because agricultural income is not taxed and also because
womenfolk are uneducated and prefer to invest in gold as a security.
As the rupee becomes stronger and global prices of gold go down, God
dealers & suppliers expect that India will increase its gold imports. In
India, bullion demand goes up and down in the marriage seasons, since a
typical Hindu wedding can involve several hundred grams of gold and
silver.
India is also known as an extremely sensitive market for gold bullion,
with most people buying at low prices and selling high.
In the sixties, since the Indian government prohibited people from
buying gold bars and coins, the official gold market was killed, while a
huge black market developed. Post liberalization, the ban was lifted and
the gold market expanded again. Unofficial channels of gold trading and
smuggling have been on the decline. Data 2004. Author Annie Zaidi |
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