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India makes buying Gold easier

Michael Victory's picture




 

via TVR

Partha Sinha, The Times of India

In Mumba Naveen Nayar, a media professional, has been buying one gram of gold 4-5 times a year as a long-term investment for his twin daughters for the last three years. However, now with the gold prices going through the roof, combined with the rising inflation, Nayar (name changed) has been forced to re-strategize on gold investment.

Consider this.. In the last one year, gold prices in Mumbai have jumped from about Rs 19,000 per 10 grams to nearly Rs 27,000, a rise of 42%. Quite naturally those who were buying one or two grams of gold occasionally — which used to cost about Rs 2,000 or Rs 4,000 then—now have to shell out nearly Rs 3,000 to Rs 6,000. Since the salaries have not jumped by as much, these investors now find it tough to stick to their plan of buying gold even in the smallest of denominations available in the market. Innovations in the bullion market are coming to address this loss of affordability.

Wholesale bullion traders in Mumbai have come out with half-a-gram gold coins and some even with pieces of gold leaf that weigh as light as 100 miligram, that is 1/10th of a gram. In addition, to give buyers the guarantee of genuineness of the yellow metal, traders are also selling these in tamper-proof packages. While half-a-gram gold coin could now come for about Rs 1,400, a piece of gold leaf of 100 miligram would cost about Rs 300. And if the investor wants to sell them, the traders buy them back at the prevailing market rate but minus the packaging and labour charges, said a top trader in Mumbai’s Zaveri Bazar.

It is possible to make gold coins of half-a-gram weight from gold bars of one kilogram, the usual weight in which it is imported. The precious metal is hammered into extremely thin sheets— wafer-thin 100 miligram resembles a leaf. Nakoda Bullion, one of the leading bullion traders in Mumbai, has started offering gold coins of half-a-gram keeping in mind the investors who buy gold as part of their long-term wealth creation plan, taking the systematic investment plan (SIP) route.

Launched six months ago, Nakoda is selling about 2,000 pieces every month now, but expects this to rise to around 20,000 pieces during the coming festive season, especially before Diwali.”The idea has been borrowed from FMCG companies selling premium soaps in small packets in rural areas to meet the rising aspirations of the people,” said Chetan Rathod of Nakoda Bullion. Riddhisiddhi Bullion, one of the leading bullion traders and importers in India, launched gold leaf of 100 miligram in February as a pilot initiative. These pieces are now being used as gifts but Samir Shah of Riddhisiddhi Bullion says very soon investors would start buying them.

 

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Wed, 09/14/2011 - 03:17 | 1666932 chinawholesaler
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Wed, 08/31/2011 - 05:26 | 1618185 Snidley Whipsnae
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Pan Asia Gold Exchange (PAGE) will have a great impact on PM markets. It is already up and running and will be fully functional in Q4 this year. It is fully backed by the Chinese gov and is not going to allow paper settlement. Trades will be conducted in RMB (Yuan) and this is indication that China is allowing more international use of the RMB.

Below is a good video with explanations of how PAGE will work. More than 200 million Chinese customers will have immediate access to PAGE through their accounts at Chinese banks. 6 Chinese banks will have a morning price fix, set by cost averaging. This is going to rock the LBMA and COMEX...

Here is an interview by James Turk of Ned Taylor Leyland. Leyland is involved to a small degree in setting up PAGE but the Chinese already know what is wrong with the LBMA and COMEX mkts and are avoiding making the same mistakes... I borrowed this link from Max Keiser...

http://maxkeiser.com/2011/08/30/ned-naylor-leyland-talks-to-james-turk/

Wed, 08/31/2011 - 03:29 | 1618135 thunderchief
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If this trend catches on then it will further turn gold into money, as mirco amounts can be exchanged.  A card with .5 grams is a great idea, and will eat up more of the physical market, and keep more gold bars out of the vaults, where it can be loaned out as a paper derivative.  Bad for central banks and the paper ponzi schemes.

The miners will have their day in the sun as well.  They are the cheapest form of gold and silver going right now.

Wed, 08/31/2011 - 03:55 | 1618153 Dick Fitz
Dick Fitz's picture

0.5g today- +/- $30US.

so, 0.1g would be +/- $6US. A "currency" of fiber (like $US) with an imbedded gold leaf of 0.1g, 0.3g, 0.5g,1g, and 2g would replace the five, ten, twenty, fifty and hundred dollar bill (at current prices, even though these would be higher- it's a rough translation) and if you took $2,000 in 0.1g bills and burned them then the residue would have 1 oz of gold.

I'm all for Ron Paul's push to overturn legal tender laws. If you want your bank to store your wealth in oil, or copper, or gold, or fractions of an equity fund, or pig belly futures, at the point-of-sale the merchant could convert it into any commodity they desire. Products could be priced in "dollars" but your balance in the bank would shift, and if you had a balanced portfolio of various forms of wealth then the flux would be minimal.

Just typing/thinking out loud.

Wed, 08/31/2011 - 03:03 | 1618124 Sambo
Sambo's picture

200 million gold buyers in India out of a total population of 1.2 billion.

The 200 million below poverty line buy gold only in their dreams. When the dream ends they wake up to look for bread & water.

Wed, 08/31/2011 - 05:29 | 1618187 Snidley Whipsnae
Snidley Whipsnae's picture

45 million in the US receiving food stamps out of a population of how many? How much gold are the food stamp recipients buying?

India has no lock on poverty... Our banksters make sure of that!

Wed, 08/31/2011 - 02:34 | 1618106 Banjo
Banjo's picture

I am not a fan of bullion vault fees I would rather organise my own secure storage in various locations. Don't put all your eggs in one basket. Including bullion vault.

Also I agree with your sentiment on prescious metal miners, I personally won't touch them. They dilute share holdings there are different tranches of ownership and far to many other things that can and do go wrong. Highly speculative money at best.

Also agree on the gearing in on physical metal to gain advantage. Have done this in small amounts on zero interest credit cards over the past two years and very happy with the results especially with buying 20kg of silver at $25oz

 

Tue, 08/30/2011 - 20:33 | 1617202 Save_America1st
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Turd Ferguson Bitchez!!! http://tfmetalsreport.com

oh yeah...silver and gold too Bitchez! :)  BTFD!!!

Wed, 08/31/2011 - 05:59 | 1618195 GoldBricker
GoldBricker's picture

Bollywood bitchez, if you please!

Tue, 08/30/2011 - 19:54 | 1617078 Hurdy Gurdy Man
Tue, 08/30/2011 - 19:54 | 1617077 Hurdy Gurdy Man
Tue, 08/30/2011 - 18:25 | 1616804 1Fatboy
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While passing through the Dubai Airport the other day I noticed  a large gold kiosk in the center of the duty free.  Operating 24 hrs, they sell jewelry, coins and bullion (up to kilo) size.  Their bullion price is $200 over spot and people were buying.  Their 22k jewelry was about $65 a gram (about $160-ish over spot). In the span 10 minutes watching the counter I noticed at least 3 people purchase gold (at 1am).  I asked one of their employees how business was and she said it was 'panic buying' and busy all day long...saying that people would take the gold to other countries in the middle east and sell it at a further markup.  I would not have believed it if you told me but having seen it, it tells me that other areas may have a harder time purchasing gold than people in the US, potentially pulling the price upward.

Tue, 08/30/2011 - 18:43 | 1616868 IQ 145
IQ 145's picture

Whether or not they have a harder time depends on whether their brains work or not. Anyone can buy gold at bullionvault.com.

Wed, 08/31/2011 - 02:55 | 1618120 Lord Koos
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It's kind of hard to buy from a dot com if you don't have a computer or internet.

Shouldn't there be a minus sign in front of your IQ number?

Wed, 08/31/2011 - 05:04 | 1618179 Snidley Whipsnae
Snidley Whipsnae's picture

Perhaps IQ 45 ?

Individuals flaunting IQs are suspect from jump street...

Tue, 08/30/2011 - 22:36 | 1617636 TheJudge2012
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Last I checked, BullionVault does not let you take delivery. One does not really know if they own the gold behind the electronic digits in the accounts.

Tue, 08/30/2011 - 21:49 | 1617457 slavador
slavador's picture

Those of us who don't do business with the Rothschilds shop elsewhere.

Tue, 08/30/2011 - 20:16 | 1617150 1Fatboy
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That's great but we're talking Africa and Asia, not Annapolis; if you can't reliably have it delivered to your address outside of Addis Abba, Karachi, Goa or Mumbai then you'll likely pony up.  I like apmex myself. 

Tue, 08/30/2011 - 20:56 | 1617282 Pladizow
Pladizow's picture

This idiot IQ 1.45 makes alot of absolute statements with zero thought.

Tue, 08/30/2011 - 22:29 | 1617610 Phillips Capital
Phillips Capital's picture

what happened to the avatar?!?! 

Tue, 08/30/2011 - 18:05 | 1616744 Jasper M
Jasper M's picture

Retailization of a product is topy. 

Bending over backward to find way to sell a little bit of something to even those whoa would normally be priced out of it, usually leads to a propt saturation. 

Tue, 08/30/2011 - 21:06 | 1617275 Pladizow
Pladizow's picture

When it comes to gold, Indian untochables are better informed then most comparatively wealthy Americans.

Tue, 08/30/2011 - 23:46 | 1617877 fiddler_on_the_roof
fiddler_on_the_roof's picture

Correct. Irrespective of the caste, everyone over there loves Gold(not much love for silver though)

Tue, 08/30/2011 - 17:31 | 1616667 lovesmoney
lovesmoney's picture

not to mention that Indians exchange gold when people get married rather than giving diamond rings, as in the west.

Tue, 08/30/2011 - 17:47 | 1616711 lovesmoney
lovesmoney's picture

7 reasons why Indians love gold  http://anamikas.hubpages.com/hub/Significance-of-Gold-in-Indian-Culture-indians-reasons

 

Though gold has several applications or uses the main reasons why Indians take to gold are

1) Gold is considered an equivalent for liquid cash: Gold is highly liquid and portable as a Security or Asset. It can be converted to cash anytime when an emergency arises and is considered a friend in need.

2) Gold is considered as Status Symbol: Especially in India gold symbolizes wealth. In Indian weddings the gold the bride brings in show her family's status and wealth and forms part of the dowry given to bride. It is believed that a bride wearing 24k gold on their wedding to bring luck and happiness throughout the married life.

3) Gold is a very good investment: Gold is an asset which has consistently increased in value and thereby considered as a safe and secure investment. Gold is considered an effective diversifier which helps to reduce portfolio risk.

4) Gold is considered as a good gift item: It's precious and worthy across all cultures and times. The gold jewelry is given as gifts during weddings, festivals and other special occasions.

5) Gold has great religious significance: Gold is the symbol of the Hindu Goddess Lakshmi and considered highly auspicious. Gold is brought or presented on festivals like Dhanteras and Akshaya Tritiya. Toe rings are never made of gold as it represents the goddess of wealth and should not be soiled by touching a human's feet.

6) Great Ornamental Value: Who can resist gold Ornaments? Women of every age and time have always loved wearing gold ornaments. Moreover, Gold Ornaments are never out of fashion. It also may be remembered that Wedding rings are also traditionally made of gold to mark a long lasting relationship.

7) Great value as Heirloom: Gold jewelry is something which can be passed down from one generation to the other as ancestral property.

Isn’t this why people say Gold is forever?

Wed, 08/31/2011 - 06:07 | 1618200 Tompooz
Tompooz's picture

8. gold looks really sexy on brown skin

Tue, 08/30/2011 - 17:47 | 1616712 lovesmoney
lovesmoney's picture

my favorite reasons are #2 and #3 what does is the verdict from ZH readers.

Tue, 08/30/2011 - 17:39 | 1616686 Crisismode
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And when TSHTF . . . .

 

Diamonds will be less than useless.

Tue, 08/30/2011 - 19:41 | 1617045 Confused
Confused's picture


And when TSHTF . . . .

 

Diamonds will be less than useless.

 

Why, aren't they useless now? 

Wed, 08/31/2011 - 04:53 | 1618176 Snidley Whipsnae
Snidley Whipsnae's picture

"Why, aren't they useless now?"

Because they can be traded for poon-tang.

As living standards decline and food prices become a larger part of disposable income will the trade still hold? Probably in the upper crust of society but food or PMs for poon-tang might be a better trade for us in the  lower crust.

Just think... the entire world financial structure would be altered if one asset class, poon-tang, were free.

Wed, 08/31/2011 - 06:37 | 1618218 Ace Ventura
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"Just think... the entire world financial structure would be altered if one asset class, poon-tang, were free."

Indeed. Pick any philosophy devised by mankind, and whatever their merits or faults, they are but subsets of the simple philosophy mentioned in Snidley's quote. There is a reason why Poon is still....after several millenia....the undefeated champion of the world.

 

Tue, 08/30/2011 - 17:45 | 1616704 lovesmoney
lovesmoney's picture

and more on why we indians love gold http://www.gold-eagle.com/editorials_02/mehta052402.html

Tue, 08/30/2011 - 17:20 | 1616650 slvrizgold
slvrizgold's picture

That's a trip that people regard fiat money so poorly that they would rather have a flake of gold so thin and light that it could blow away if you turned the fan on than a $10 bill.

In other news, gold and silver miners are all increasing their dividends and buying back stock, which presents quite a challenge for share shorts.   GORO is a silver rich high grade small miner paying a 2.5% yield that announced last week they intend to distribute a dividend "in kind" eventually from the gold and silver coins they are going to start minting.   How cool is that to own a stock that is going up in value and get 2.5% mailed to you every year in gold and silver coin!!!   GORO is at the low end of its 2011 trading range.   The dividend is 5 cents monthly and the stock is 24.  

AUMN/ECU merger is almost closed.   That is a very dynamic small cap silver developer near term producer with a beautiful suite of silver/gold assets.   This stock went vertical from $6 to $30 last year and been grinding lower for a year.   It got to $14-15 and capitulated to $11.    They have $85M cash, or almost $6 per share cash.    The stock is making a technically perfect recovery now and still under $14.    Will be in 20s easily later.    This could be a multibillion market cap if they can turn their development assets into producing mines in the next few years.   Only 15M shares (34M FD after the ECU closes).   Tiny tiny tiny market cap.   Sprott and other smart people own this stock.

 

Tue, 08/30/2011 - 18:41 | 1616857 IQ 145
IQ 145's picture

There is no reason to own any mining stock. Since no rational reason exists; it cannot be a good idea to own a mining stock. The usual rationale is that the stock price will increase faster than the underlying; historical analysis show that this is false. This effect, called Beta, can be achieved by buying metals on margin; A mining stock is first and foremost; a stock. With many, many, things that can wrong in between the purchase and the sale. There are more risk elements than owning metal; but no more profit potential; hence it is irrational.

Wed, 08/31/2011 - 04:44 | 1618172 Snidley Whipsnae
Snidley Whipsnae's picture

IQ145...Your reasoning would be sound were we not experiencing a one time shift (actually it's happened many times but not here) from fiat currency back to commodities backed currency or actual PMs as currency. What PMs purchasing power will be in the new commodities backed currencies is anyone's guess...but it will be high compared to many other assets/asset classes.

Those holding PMs after the shift in world currencies is complete will benefit from their holdings, if they avoid confiscation, exhorbitant taxation, etc. A hole in the ground in a safe location should help one to avoid most of the bs confiscation attempts...but a foreign hole in the ground is probably a better choice.

Very interesting comments in this Reuters interview... According to these analysts, unbacked paper is toast...and soon.

http://insider.thomsonreuters.com/link.html?cn=uidTWEMEA&cid=254660&shareToken=MzozYjRiMDI1Ni05YzlhLTRiNTAtYmY3MS1iMGFlYjY3NzIzMGM%3D&start=0&end=519

Tue, 08/30/2011 - 21:44 | 1617443 slavador
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Unhedged gold miners are a trustworthy source of new gold for the forseeable future. As the price increases, they are able to increase their production by milling previously unprofitable ore and by making theoretical ounces into real ones. Gold futures using margin are a bad idea for several reasons. Most important is that the gold supply does not reflect the amount sold, with the fact that speculators often take delivery of cash rather than gold the trick that keeps it all going. If a squeeze takes place that breaks the COMEX it is likely that folks with long contracts will be defaulted by the shorts that are unable to deliver and have become bankrupted. If the price of gold goes down, use of leverage will wipe out a long investment completely. All major gold companies have low P/E ratios presently, with earnings based on a 1200/oz price. They are poised to double if the price of gold just stays stable.  For wealth preservation, physical bullion hidden on ones private property is the smartest route.  For growth, mature gold diggers are a good bet whilst junior explorers are where the fortunes in a mania will be. 

Tue, 08/30/2011 - 20:52 | 1617270 Pladizow
Pladizow's picture

Wow - what an idiot!

Tue, 08/30/2011 - 21:11 | 1617320 SamuelMaverick
SamuelMaverick's picture

Wow, this is an example of a high IQ with no common sense.  Iq guy, go look at some miners in the 1970's, some of them went from .50 cents up to $50. 

Tue, 08/30/2011 - 17:18 | 1616639 bill1102inf
bill1102inf's picture

Gold is in nothing more than a speculation rally bubble ALWAYS counting on some other schmuck to pay more for the almost useless and mostly unnecessary metal.  While its never been to $0.00 it will never go to infinity either, nor will it ever pay a dividend.  Tulipmania, look it up.  Tulips will never be worth $0.00 either, but you will never be able to buy a house with one again either.

Wed, 08/31/2011 - 04:21 | 1618164 Snidley Whipsnae
Snidley Whipsnae's picture

Gallup Poll... 8-25-11

"Americans Choose Gold As Best Long Term Investment"

http://www.gallup.com/poll/149195/Americans-Choose-Gold-Best-Long-Term-Investment.aspx

Wed, 08/31/2011 - 03:44 | 1618150 Alpha Monkey
Alpha Monkey's picture

Come back when Tulips have 5000 years of monetary history.  Then we'll talk.

Tue, 08/30/2011 - 21:18 | 1617335 brokesville
brokesville's picture

GOLD is TRADITION, thats why i buy it. tulips not so much

Tue, 08/30/2011 - 23:56 | 1617895 russki standart
russki standart's picture

I prefer gold  in my safe,but as a second choice, I do like tulips, especially on my organ. 

Tue, 08/30/2011 - 19:48 | 1617063 PaperBear
PaperBear's picture

When the USD goes into price inflation of over 50% it will race to the bottom and gold/silver will go to infinity.

Tue, 08/30/2011 - 18:37 | 1616842 IQ 145
IQ 145's picture

This analysis results from the careful brainwashing paid for by the brokerage industry; For twenty years you were told that you were an "investor"; that "investors" were okay; but "speculators" were bad. Etc. Etc. In reality you have always been a speculator; there are no investors. All markets you are familiar with, are speculative markets. All the participants are speculators, all the time. This is one of the facts you have to get straight in the process of de-programming yourself so you can understand markets. Therefore, there is no distinction to be made in the Gold market, vis a vis any other market. What you want to know is does speculation work? And the answer is, of course it does. It's only necessary to take profits at some time. There's no major market that doesn't offer you plenty of time to exit if it is no longer a "Bull Market"; therefore there is no problem. The problem comes from imagining that you are an investor; and there fore entitled to buy and hold. No one gets to buy and hold. No one. This is, once again, propaganda. Many people made good money speculating on houses in Southern Calfiornia, and other places; all that's necessary is to remain sane and be able to say; okay, this has gone too far too fast, I'm gonna step aside now, see what happens next. Oh, by the way, there is nothing that pays a "dividend" that equals inflation; nothing. Sorry about that.

Wed, 08/31/2011 - 06:56 | 1618232 GoldBricker
GoldBricker's picture

Many good points, to which I would add:

Yes, we are forced to be speculators. There was a time (check out Lombard Street) when you could invest in a stock or bond and get 4-6% with no inflation. The world will come back around to that, eventually.

Speculation is relative; a house in SoCal is more speculative than, say, a farm in a safe, remote rural area. A gold miner is more speculative than the physical metal in one's possession. Miners are like other commodity companies: managements may be crooked or incompetent, their relations with the locals good or bad, and their political risk high or low. Their assets can be nationalized with the stroke of a pen (or taxed higher as soon as they make any money - witness Canada's move on energy trusts a few years ago). The gold share is more like a call option with a long expiration and a far OTM strike price; you'll either win big or lose your stake. The turnip-dumb thing is paper gold, where you have the insecurity of a paper asset, but with no more upside than the physical.

And yes, "buy and hold" was surely coined by someone who, himself, wanted to sell and never have to buy back.

Tue, 08/30/2011 - 23:38 | 1617854 donsluck
donsluck's picture

I agree with the major point, that you have to watch your speculations (founded on clear thinking) and cash out at a good point. Buy low is relatively easy, sell high is difficult since you get high from the success and want more. Fight your addictive tendencies. Be a chipper!

Tue, 08/30/2011 - 20:50 | 1617263 Pladizow
Pladizow's picture

To: IQ 1.45

WOW - Way to say alot of nothing!

Tue, 08/30/2011 - 19:52 | 1617074 DCFusor
DCFusor's picture

+145 man.

Tue, 08/30/2011 - 17:46 | 1616710 Money 4 Nothing
Money 4 Nothing's picture

Again..

"Gold is Money, everything else is credit"

-J.P. Morgan..

So, it doesn't matter what you believe, if they believe it, then it will come to pass. Too many Countries recalling or purchacing more Gold holdings. You just have to ask yourself.. Why?

 

The Bad Guy.

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