Gold Frenzy In India Continues For Second Week As Festival Approaches

Tyler Durden's picture




 

When it comes to true demand for the "unfondleable" barbaric relic, one can look at spot prices (or listen to CNBC, at least when gold is correcting when it is being commented on every 5 minutes; when it has soared by $150 in 10 days, one hardly hears a peep), or one can continue looking at the absolute frenzy in the physical markets, now all over the world, where those who refuse to take their eyes off the ball, or the G-7 printers as the case may be, understand very well how this story ends. They also understand that the recent gold correction has simply been a buying opportunity, and the further the price fell, the more gold was bought until finally mints, refineries, and brokerages have run out of physical in inventory.

And unlike all those pundits who do nothing but talk (and/or "act" using monopoly money) these are people who actually put fiat where their convictions lie. Or rather, have continued to do so for a second week in a row, with a frenzy unmatched in history.

Bloomberg reports on the ground from India, the world's biggest importer of gold, where gold consumers "thronged jewelry stores across the country for a second week on speculation that bullion may extend a rally after the biggest plunge in three decades."

“We waited for sometime to see if prices will fall more but when we saw them moving up again, we decided it’s time,” said Sripal Jain, a 77-year-old silver dealer who came with his younger brother, daughter and daughter-in-law to buy gold necklaces at Mumbai’s Zaveri Bazaar. “We don’t have any wedding or occasion coming up. The rates fell, so we decided to buy"... "Some bullion dealers are asking buyers of coins and bars to lock-in price today and come two days later as they do not have much inventories,” said Dharmesh Parekh, a partner at R.V. Jewellers in Mumbai. 

Nationwide daily sales of jewelry, coins and bars may be about 4 metric tons, compared with normal levels of about 2 tons to 2.5 tons, Rajesh Mehta, chairman of Rajesh Exports Ltd. (RJEX), said yesterday. UBS AG said April 23 that physical-gold flows to India approached the highest since 2008, while Standard Chartered Plc said shipments last week were 20 percent above a previous record.

 

Demand has been extraordinary in the past 15 days and sales this April have been much better than last year,” Kamal Gupta, chairman of P.P. Jewellers Ltd., said by phone from Delhi.

And if demand is soaring now, just wait for wedding season: the annual peak of gold consumption in the country in which gold has been an effective currency since the beginning of time, and where gold-backed loans represent a substantial amount of credit creation in circulation, and recently hit an all time high.

Just as interesting, in India not everyone is a momentum speculator, like the few remaining stock traders in the western world: there one can actually find examples of that dying breed - the value investor. “Everyone is thinking that they will miss the bus if they
don’t buy now as prices have started moving up,”
said Ramesh Pahlajani,
partner at Mumbai-based Bherumal Shamandas Jewellers. “Demand has been
very good since last week.”

To be sure, those who have an angle are also getting involved: "Gold will rally to $1,800 an ounce by December as skepticism over the global recovery increases demand, billionaire Indian jeweler T.S. Kalyanaraman said on April 19. The metal hasn’t traded at that level since November 2011. Prices may climb to $1,550 within six months on physical and investment demand, according to Mark Pervan, global head of commodity strategy at Australia & New Zealand Banking Group Ltd. "

All this means that India is merely yet another place where one is greeted by "No Gold" signs in the windows of gold retailers, as the disconnect between the price at which miners can make product, the price at which it is sold into retail hands, and where the futures based market implies it should be, have broken all supply/demand linkages.

The rush to buy has led to a shortage in India and jewelers are paying premium of as much as $10 an ounce compared with $2 just 10 days earlier, said Bipin Jain, owner of Vimalson Jewellers and a vice president of the bullion association.

 

“Three days ago there were queues to buy coins and bars,” Jain said from his shop in Zaveri Bazaar, the largest bullion market in the country. “Demand has slowed a bit from then but buying will remain strong till Akshaya Tritiya.”

And speaking of Akshaya Tritiya, it is just three weeks away, when gold demand is really set to explode:

The Akshaya Tritiya festival on May 13 is considered by India’s more than 900 million Hindus as the traditional day to buy precious metals. Gold is bought during festivals and marriages in India as part of the bridal trousseau or gifted in the form of jewelry by relatives. The main festival season runs from August to October followed by the wedding season from November to December and from late March through early May.

 

“My sister-in-law is getting married and I have advanced buying because of the recent price fall,” said 33-year-old costume designer Praveena Saleja, as she examined a 350,000- rupee ($6,460) necklace studded with gems. “Prices will rise again. Nowadays the designs are more trendier so I can pair them with western outfits as well as Indian.”

 

Saleja said she considered gold as a long-term investment and was not deterred by the price slump.

What a refreshingly logical assessment.

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Fri, 04/26/2013 - 10:57 | 3502372 Pladizow
Pladizow's picture

Nothing quite like eating a Vindaloo with a .9999 golden spoon!

Fri, 04/26/2013 - 11:02 | 3502396 gmrpeabody
gmrpeabody's picture

Gold and silver up nicely for a string of days, yet the miners are getting slammed?

Perhaps they've changed their tactics...

Fri, 04/26/2013 - 11:06 | 3502402 smlbizman
Fri, 04/26/2013 - 11:33 | 3502530 gmrpeabody
gmrpeabody's picture

My guess would be that the bullion banks want to own more gold in the ground as opposed to paper gold. Thus the heavy shorting.

Fri, 04/26/2013 - 11:44 | 3502560 doomandbloom
doomandbloom's picture

They are eating gold in India....no seriously

http://articles.timesofindia.indiatimes.com/2011-12-26/bangalore/30558561_1_dosa-foil-gold

But Rajbhog's claim to fame is its gold dosa - a traditional dosa, but made with olive oil and covered with gold foil and probably the costliest in the land. Ordering the gold dosa will set you back by Rs 1,011

Fri, 04/26/2013 - 11:52 | 3502618 gmrpeabody
gmrpeabody's picture

"Perhaps they've changed their tactics..."

Oh wait..., I spoke too soon...

Fri, 04/26/2013 - 11:07 | 3502405 francis_sawyer
francis_sawyer's picture

Some PUD-o-nomics coming in 5...4...3...2...

Fri, 04/26/2013 - 11:21 | 3502472 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Day 1:  "Gold is collapsing!  Look at that Comex price fall! I can just picture the hoarders with tears in their eyes as their yellow metal fantasies disintegrate in the face of the reality that no one cares about PMs except them.  The world has moved on losers.  Deal with it!".

 

Day 5 of massive run for physical:  "You are just the worst sort of people!"

Fri, 04/26/2013 - 13:03 | 3502982 dow2000
dow2000's picture

Yes you are absolutely correct.  The 6,000 year history of gold/silver currency value has ended precisely during the flicker of time you are here on earth to witness it....moron.

Fri, 04/26/2013 - 11:07 | 3502404 whatsinaname
whatsinaname's picture

In India Gold is almost a religion. Its almost sinful to sell gold and you sell it only if calamity strikes.

Fri, 04/26/2013 - 11:10 | 3502416 Pladizow
Pladizow's picture

Only religion that makes sense!

Guess that provides balance to the cow thing?

Fri, 04/26/2013 - 11:16 | 3502445 walküre
walküre's picture

Gold for the Indians

Thrift stores for Americans

 

Fri, 04/26/2013 - 13:30 | 3503091 Peachfuzz
Peachfuzz's picture

That link seriously made my day, thank you very much for that!

Fri, 04/26/2013 - 11:15 | 3502440 Quinvarius
Quinvarius's picture

Real economics has nothing to do with religion.  Central banking fiat is what requires faith and religious zeal.  I am sick of the fiatsters trying to gain converts to their cult.  I wish the paper lovers would just announce the day their spaceship is going to show up and start drinking the koolaid already.

Fri, 04/26/2013 - 11:06 | 3502408 williambanzai7
williambanzai7's picture

INDIAN CLAIMS GOLD IS CLOTHING NOT MONEY

Fri, 04/26/2013 - 11:12 | 3502427 ParkAveFlasher
ParkAveFlasher's picture

+1 LMFAO.

Fri, 04/26/2013 - 11:15 | 3502430 IridiumRebel
IridiumRebel's picture

This is some of your best work.

 

Nanke Dawg Rap Video take one.....

 

My name is Nanke,

My buds is stanky

Rehypothecatin gold

From the Fed vault banky

 

My balance sheet is growing

And the debt is blowing

As the dollars we printin

Will keep the inflation flowing

 

Backed by Obama and the Krugman Fuck

I'm keep interest a low so the Hedgies won't suck

I'm a puppet to GS, JPM and the NWO

Don't fuck with my policy as the economy slows 

 

Fri, 04/26/2013 - 11:23 | 3502473 fuu
fuu's picture

Remy?

Fri, 04/26/2013 - 11:37 | 3502534 IridiumRebel
IridiumRebel's picture

nah, fool.....I'll take a French Connection, yo. Dats Courvossier and Di Sarrano yo. 

Fri, 04/26/2013 - 11:11 | 3502435 Tinky
Tinky's picture

Damn, Ben – that's fly! Where'd you get it?

"Shoppers Willage."

Fri, 04/26/2013 - 11:12 | 3502438 Cacete de Ouro
Cacete de Ouro's picture

That mask brings out the true Ewok in Ben

Fri, 04/26/2013 - 11:14 | 3502446 ohhhhhbaaaaahhh...
ohhhhhbaaaaahhhhhhhhhmaaaaaahhhhh's picture

No gold is not money, its a fashion. BRO

Fri, 04/26/2013 - 11:19 | 3502460 TeamDepends
TeamDepends's picture

Piece de resistence:  Give him gold teeth a la Flavor Flav!

Fri, 04/26/2013 - 11:38 | 3502539 IridiumRebel
IridiumRebel's picture

Yeeeeeaaaahhhhhhh Buuuoooyyyyyyy!!!!!!

What time it is?

Fri, 04/26/2013 - 17:36 | 3503975 StychoKiller
StychoKiller's picture

"Shiva H. Vishnu, my jubilation knows no bounds!" -- Apu

Fri, 04/26/2013 - 17:32 | 3503969 StychoKiller
StychoKiller's picture

Gad, I hope that guy (the original pictured guy) has some bodyguards, wouldn't want to give up that shirt on yer back! :>D

Fri, 04/26/2013 - 12:12 | 3502722 Freddie
Freddie's picture

Damn!  I gotta get me one of them Indian golden pimp shirts.  I will be beating off the chicks off or maybe they will be beating me....off.

Fri, 04/26/2013 - 12:44 | 3502852 de3de8
de3de8's picture

So long as not too hot for the .99999.

Fri, 04/26/2013 - 10:59 | 3502373 The Juggernaut
The Juggernaut's picture

So THATS where all of JPM's gold went.

Fri, 04/26/2013 - 11:00 | 3502376 achmachat
achmachat's picture

still available in moderate quantities here in Europe.

Get yours before the wholesalers put a 4 week shipping time on gold coins, just like silver at the moment.

Fri, 04/26/2013 - 11:09 | 3502422 KnightTakesKing
KnightTakesKing's picture

I just ordered a monster box of 2013 ASE's from Texas Precious Metals. This morning. They have them in stock but are selling briskly. Get yours before they are all gone! $14784, works out to $29.53 per coin.

https://www.texmetals.com/silver-coins/silver-monster-boxes.html

Fri, 04/26/2013 - 11:13 | 3502442 smlbizman
smlbizman's picture

out of stock.....

Fri, 04/26/2013 - 11:26 | 3502483 JoeSexPack
JoeSexPack's picture

Gone gone gone...

Fri, 04/26/2013 - 10:58 | 3502377 ak_khanna
ak_khanna's picture

One thing I fail to understand is that why most analysts are recommending the purchase of Gold as a safe investment? The problem today is that the price of Gold is not derived by it's physical demand or supply but more by the speculative positions standing long or short on the commodity exchange like any other traded commodity, stock or currency.

The basic mechanism of price discovery (based on demand and supply for actual use) of anything traded on an exchange has been terminally infected by speculators having access to unlimited funds and super fast computers for trading leading to volatile price swings. This has been made worse by the launch of ETFs for anything and everything under the sun by the financial community.

The price of everything including Gold is likely to suffer when the speculators unwind their positions due to some event that they have not anticipated or foreseen. 

 

http://www.marketoracle.co.uk/Article35345.html
www.letstalkmoney2012.in

Fri, 04/26/2013 - 10:59 | 3502382 IridiumRebel
IridiumRebel's picture

That tide is turning.

Fri, 04/26/2013 - 11:05 | 3502395 The Abstraction...
The Abstraction of Justice's picture

One of the reasons some people recommend the PM group metals other than gold, is that they all have industrial value. If you can't get a good price from investors, you can still get a good place from industry.

Fri, 04/26/2013 - 11:06 | 3502411 mayhem_korner
mayhem_korner's picture

The problem today is that the price of Gold is not derived by it's physical demand or supply but more by the speculative positions

 

Agree, but the big spec positions are SHORT, and the paper derivatives equate to a 50 or 100x multiple claim on the physical, which is akin to a SHORT spec position.  So the spec position unwind will drive physical prices UP, not down.

Fri, 04/26/2013 - 11:15 | 3502453 Bay of Pigs
Bay of Pigs's picture

You would think he could connect those dots if he has been here for any length of time.

If he is reading Monetary Metals (Weiners garbage contributions at ZH), no wonder he is confused.

Fri, 04/26/2013 - 12:43 | 3502863 de3de8
de3de8's picture

Dense as gold

Fri, 04/26/2013 - 11:09 | 3502412 Doubleguns
Doubleguns's picture

When price per ounce drops below price that miners incur to mine it, mines will close and supply disruptions will increase price again. 

 

http://investorplace.com/2013/04/gold-miners-are-in-deep-schist/

Fri, 04/26/2013 - 11:22 | 3502466 Quinvarius
Quinvarius's picture

Because keeping your cash in the form of gold has been historically much smarter than keeping it in constantly debased paper that fluctuates wildly in value just before it dies.

This stuff going on now has all happened before.  We'll be back on gold soon enough.  The reason?  Nothing else has ever worked as a standard unit for global exchange.  Gold grew up with border crossing trade.  Global trade requires everyone to use the same unimpeachable unit of account.  Failing that, your global economy shuts down.

Keynesianism is not economics.  It is political goalseeking claptrap.  It is no different than Pol Pot's vision of Utopia.  You have to be an idiot to think it could work.  And to make it work, you have to kill anyone who is not an idiot.  

Fri, 04/26/2013 - 10:58 | 3502378 mayhem_korner
mayhem_korner's picture

 

 

Heresy!  Anyone who thinks gold cannot be fondled is a fool.

Fri, 04/26/2013 - 10:58 | 3502379 IridiumRebel
IridiumRebel's picture

So many barbarians going for gold these days. Silly barbarians, relics are for heathens....

Fri, 04/26/2013 - 17:37 | 3503987 StychoKiller
StychoKiller's picture

All hail Eris!! :>D

Fri, 04/26/2013 - 11:02 | 3502384 Rory_Breaker
Rory_Breaker's picture

Tomorrow is pay day. Have to buy some on Akshay Tritiya, it's tradition.

Fri, 04/26/2013 - 11:01 | 3502387 The Abstraction...
The Abstraction of Justice's picture

Buy low and sell high and ZHers will pat you on the back---providing what you buy is PM, and not BTC. 

Fri, 04/26/2013 - 11:05 | 3502406 Rory_Breaker
Rory_Breaker's picture

Thanks.

For now there is no intention to sell :)

Fri, 04/26/2013 - 11:26 | 3502477 Ham-bone
Ham-bone's picture

spoke to two LCS yesterday...both are actually getting very nervous as they are literally not getting any customers selling to them (sellers strike), they can't get anything near the supply they want from wholesalers, and their business (volume) has gone in the crapper. 

Both were down to a small quantity of rounds that they would not sell until or unless they can either figure out how to get replacements or things get so slow they really need the cash.

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