In recent years, India's farmers have hit on one of the world's best-performing investments...
THE GLOBAL STOCK-MARKET MELTDOWN has hit the Indian stock markets brutally, and so India's gold market is desperately waiting for D-day, says Commodity Online in Mumbai.
Diwali falls on Tues 28 Oct. this year – and the Gold market's hopes now depend on the sales during this "festival of lights".
So far this year, high Gold Prices have left buyers uninterested. But traders are still hoping for the Diwali sales to prop up their sagging business, which has been hit by the fall in financial markets worldwide.
Not only big jewelers and Mumbai's Zaveri Bazaar are betting on a Diwali rush. Even leading banks are desperate to cash in on the typical seasonal gold rush of gold investors and jewelry buyers (often meaning the very same thing) during Diwali.
Recently, ICICI Bank, Reliance Money, State Bank of India, HDFC Bank and Kotak Mahindra Bank have stepped up their campaign to market Gold Coins and bars for the season. But forget banks; even post offices have rushed in to join the bandwagon!
This month, India Post launched a joint venture with Reliance Money and the World Gold Council to sell Gold Coins through its 100,000 branches.
Why? The Diwali festival season is deemed auspicious occasion for Hindus to Buy Gold. And with the Rupee price falling in August, India's gold imports shot up by 45% to meet the expected Diwali demand.
Traders expect a major recovery during this week. According to analysts, local Gold Prices in India could go as high as Rs 15,000 per 10 grams.
All told, India's private citizens have amassed a vast stockpile of gold, estimated at 15,000 tonnes and worth $420 billion. That stockpile is growing by about 600 tonnes each year.
The Indian fascination with gold is woven into its traditions. Gold is bought to celebrate weddings, births of children and religious festivals. But it is also the only way for the 500 million Indians who have no access to banking services to store excess earnings against bad times.
The country's farmers traditionally convert any surplus earnings from the annual harvest into gold. And in the past few years, India's farmers have unwittingly hit on one of the world's best-performing investments.
India's Sensex stock market index has halved in value since it peaked at about 21,000 on January 11, and is now trading just above its value at the start of 2006. Anyone buying gold at the start of 2006, on the other hand, would have almost doubled their money in Rupees.
India's gold industry is also fighting to steer India's middle class towards the metal. In the past few years, the middle class has been drawn to luxury goods and other savings, but is being lured back to gold. The Gold Bars and coins launched by the major banks are a part of this drive.