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Recycled Gold Needed as India's "Longest" Wedding Season Nears

Anti-import measures force world's biggest jewelry industry to seek recycled gold supplies from consumers..._
RECYCLED GOLD – bought from existing owners for selling to new buyers – is the only way India's huge wedding season demand can be met this year, according to industry specialists.
"For the first time in nearly a decade, we are expecting the longest wedding season," the Financial Express today quotes Prem Hinduja, CEO of the $140 million jewelry retail chain Tribhovandas Bhimji Zaveri (NSE:TBZ), who says the heavy gift-giving in gold will run from early November's Diwali festival to mid-2014 "barring some inauspicious days."
But while gold demand may rise to 120 tonnes on the estimate of All India Gem & Jewelry Federation chairman Haresh Soni, Indian gold imports are locked down by government rules in 2013. So the use of recycled or so-called "scrap" gold will have to fill the gap between supply and demand.
"Recycled gold is expected to increase going forward," says a new report from analysts ICRA, "owing to [its] unregulated nature and also on account of the high quantum of gold inventory at the hands of the Indian public."
"This year, the festive demand will be met through a mix of imported gold and recycled gold," agrees the Federation's Soni. "In August, we saw lot of scrap gold entering the market as gold prices touched [record highs at] 33,000 Rupees per 10 grams."
"There is a pent-up demand in the market as there was hardly any buying between June and August."
Indian households, together with the country's Hindu and other temples, are reckoned to hold perhaps 20,000 tonnes of gold in total. Recycling that stockpile has become a key concern for the government, currently desperate to curb gold imports as they are seen weighing so badly on India's current account deficit with the rest of the world.
The world's No.1 gold consumer, India has no domestic gold mine output.
Besides recycled gold, however, the government's 10% gold bullion duties and other anti-import measures have led to a surge in illegal gold smuggling.
This week Sri Lankan customs officials caught two men who had hidden 1 kilogram each inside their body attempting to board a flight for Mumbai.
"Each man had 10 gold biscuits weighing 100 grams inside his rectum," the AFP news agency quotes Leslie Gamini of Sri Lankan Customs.
Confiscating the US$100,000-worth of gold, the officials fined each man the equivalent of $384.
The men "were easily spotted" Gamini says, "because they appeared to be in pain and could not walk properly."
A further seven passengers heading from Sri Lanka to India were caught by X-ray scans on Monday, with two of them since passing four gold items each after being laxatives, and the others remaining under observation.

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