India's Gold Rush Continues

The world can pretty much count on India to buy GOLD even in the midst of a severe economic crisis even at the cost of everything else! Such is the obsession for gold amongst Indians that once again the country has emerged as the largest consumer of gold in the third quarter for the fiscal year of 2008.This at a time when other countries are saving like squirrels in winter. Not only that India has also registered a near seventy percent increase in it’s demand for gold this time of year as compared to last year.

It’s been a key reason in ensuring that the worldwide demand for gold has increased .In real terms the demand for gold in India has increased to Two Hundred and Fifty Tones which in every sense is massive.

Most of the demand for and consumption of gold has been powered by all strata of the economy. Gold has been selling well in urban, semi-rural and rural areas. A surge in gold sales during this time is usually expected since it coincides with a number of Indian festivals. A good harvest and a successful agricultural season have ensured that the festivities will be remembered for long by gold merchants.

In the coming months things should only get better because the second string of festivities spur a further demand for the yellow metal. There is also the onset of the marriage season until February which will make sure that the industry as a whole does not stagnate.

The benefit of India’s appetite to consume gold has spilt onto the feeder industries of gold. The jewelry market –especially the hand crafting industry will hope to receive a much needed boost. The demand for gold will spur an increase in the related fields of gems and precious stones.

Gold has also done well in India because from an investment point of view it continues to be a safe bet. Money from equities and mutual funds are moving into gold. Even oil traders seem to prefer gold. This has resulted in a spurt in gold prices which should hold steady unless something dramatic happens. The resurgence of gold as a major asset class has also prompted many Indian money managers to recommend it as a ‘keep’ in their customers’ portfolio.

Considering the volatile economic situation and the uncertainty that has become rampant, small and medium investors have categorically switched to gold as a safety option to offset other commercial downturns which have become too frequent these past few months. As this is expected to continue, the demand for gold will remain if not get stronger.

It’s also been good business for large business houses like Tanishq that retail gold over the counter. Even the big fish like Reliance have opened up exclusive gold retail outlets to sell gold and jewelry. Out in the rural sides, despite a lack of the big brand name; the local goldsmith is making a quick buck thanks to a buoyant demand and literally a gold hungry nation.