Indians Moving from Gold Commodity to Platinum

Indians gravitate toward platinum as gold prices continue to surge


Now that gold prices and futures look like they're going to rise even more in 2009, platinum prices could enjoy the benefit of the trend of Indian women migrating to plantinum in order to meet the demand.

Indian gold jewelry demand can't keep up with the surge in world Gold Prices right now.

THE SKY-ROCKETING Gold Price for Indian jewelry buyers has shrunk the volume of gold imports into India, reports Rishabh Vora for Commodity Online.

Demand for jewelry was already sluggish in November and December, but it simply vanished in January. However, Gold Investment demand has gained momentum here just like everywhere else as the Gold Price shot up to new all time highs.

The increasing price of yellow metal continues to hurt companies engaged in the jewelry making and trading trade – companies like Gitanjali Gems Ltd and Rajesh Exports Ltd here in Mumbai.

On the contrary, the share price of both these companies has fallen by 85% and more over the last 12 months on expectations that rising Gold Prices would have an adverse impact on their business.

Now this week, Gitanjali Gems – a leader in jewelry exports from India – just reported a fall in its consolidated net profits by 42% in the company's Q3 results. The fall in the profits were the fallout of the contraction in the diamond and jewelry segments of the company during the period.

The company witnessed a decline of 17% in its revenue from Indian operations and a 7.8% decline in its overseas operations during the quarter.

The outlook from here? According to Indian analysts, the current low gold-imports demand is mainly driven by people cashing in and selling their existing inventory or old jewelry. This has come even as Gold Investment demand has increased considerably.

Some Mumbai analysts believe that volatile investment demand driven by Gold ETFs could drive the Indian Gold Price up to a new high of 16000 Rupees per 10 grams in coming months.

Indian consumers turning to platinum jewellery 5th February 2009

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Demand for platinum jewellery is on the rise in India, according to a new report published today (5th February) by Reuters.

The country is famed for its love of buying gold jewellery - particularly for festivals and wedding seasons - but platinum has not been as closely tracked historically, with only a few companies importing bars.

However, a number of jewellers are now reporting a substantial rise in interest from consumers who are looking to purchase luxury pieces.

Sheetal Darji, a member of the sales team at Anmol Jewellers in Bandra, Mumbai, told the news provider: "Suddenly, the number of people coming and buying from my counter has increased.

"Earlier I used to handle one to two buyers daily, now the number has increased to four to five."

Those sentiments were echoed by Ishu Dattani, a partner at the company, who noted that sales have increased by between 20 and 25 per cent in the past six months alone.

Consumers such as Shweta Arora, a partner at an investment bank, are beginning to realise the value of platinum jewellery, whether it be for engagement rings, wedding bands or a present for a relative.

Contemplating purchasing a stunning platinum necklace, she told Reuters: "I wanted to buy a gift for my sister-in-law, who is a South Korean staying in the United States."

According to the news provider, Princeson Jose, Director of Princeson Jewellers, believes that demand will increase by a further ten per cent by next year.

India's local gold demand remained quiet on Wednesday as it traded above the psychological 14,000-rupees-mark in the midst of the wedding season, with scrap continuing to flow in the market, dealers and traders said.

"There is no much demand...there are no enquiries from jewellers as well," said a dealer with a state-run bank in Mumbai. "Volatility is keeping them away."

Traders said jewellers are unwilling to buy new stock due to the unsold stock lying with them in their warehouses.

"People are expecting prices to come down to $800-835 so that they can buy," added the dealer.

The benchmark April contract on the Multi Commodity Exchange (MCX) was 41 rupees higher at 14,030 rupees per 10 grams at 1:15 p.m., after hitting a high of 14,040 rupees earlier.

Gold is still available at a discount of 250-300 rupees compared with prices quoted by banks, signifying lack of demand.

Traders were also seen taking profits on the yellow metal, which they had bought at lower prices.

"Business is down by 80 pct," said Darshan Zaveri, director with Manubhai Zaveri Ornaments, an Ahmedabad-based bullion trader.

"Even we are selling gold at a discount (at the retail level)," said Zaveri, "but there are no buyers," he added.

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likely to rise further in the near term.

A more than 37 per cent fall in Indian prices tracked a slump in international spot markets, where the metal traded at $977.00 an ounce at 3:20 p.m., down 57.4 per cent from its all-time high of $2,290 an ounce struck on March 4, 2008. Platinum is not a closely tracked in India as there are few buyers. Some jewellers import bars to make jewellery, and don't always peg the daily price to international rates.

"I got to know through newspapers that prices have fallen drastically," Shweta Arora, a senior partner at an investment bank said, as she examined platinum jewellery in a suburban Mumbai shop. "I wanted to buy a gift for my sister-in-law, who is a South Korean staying in the United States," said Arora, eyeing a glittering necklace. A 10-gram platinum ring was priced around 22,000 rupees as against 35,000 rupees a year-ago, said Princeson Jose, director with Princeson Jewellers, which caters to South Indian markets.

"Suddenly, the number of people coming and buying from my counter has increased," said Sheetal Darji, a sales girl with Anmol Jewellers in Bandra, Mumbai. "Earlier I used to handle 1-2 buyers daily, now the number has increased to four to five." Ishu Dattani, a partner at Anmol Jewellers, said sales have gone up by 20-25 per cent as compared to six months back.

"Clients have accepted the price decline very cheerfully, and they are buying more," said Jitendra Vummidi, a partner at Chennai-based Vummidi Bangaru Jewellers, who stocked a lot of platinum jewellery, said over the phone. "We are anticipating further spurt in consumer interest."

PRICEY, SO PRIZED

Platinum demand is expected to pick up further, said Bharghav Vaidya, a bullion analyst in Mumbai, but "platinum would be only restricted to cities." The prices too will not remain at current, attractive levels, but this could expand the tiny market for the white metal in the gold crazy country. "If the awareness of the price fall is increased, than we might have a huge base of market for platinum," added Anmol's Dattani.

India is estimated to have consumed 932 kgs of the metal in the fiscal year 2008-09, while the country imported approximately 400 tonnes of gold in the calendar 2008, according to the Bombay Bullion Association. "There is a probability of a rebound in prices of platinum, with $1,020 a good resistance area," said Harish Galipelli, head of research with Karvy Comtrade in Hyderabad.

The economic slowdown too will play its part in stifling demand, but the overall demand would increase by 10 per cent next year, said Jose. "If the prices remain at par with gold, then the consumption of platinum will definitely go up."

Platinum investors can take heart at this recent development, as auto sales and auto manufacturing doesn't look like it'll rebound any time soon, and finding a significant market for platinum in an unsuspected place is a potential great boon for platinum prices in 2009.