FAIR USE DOCTRINE, Educational and Discussion purposes only:
Recycling of Gold UP as Price of Gold Soar
REUTERS[ MONDAY, DECEMBER 30, 2002 10:06:41 PM ]
MUMBAI: More and more people in India, home to the world's biggest
gold stocks, are queuing up to sell their jewellery as prices soar to
five-year peaks.
Traders said on Monday they estimate the supply of scrap metal has
jumped four-fold to 50 kgs a day in the Mumbai market, the main
consuming centre.
That has squeezed imports and traders say the trend is likely to
continue for the next two weeks if global prices remain high as
domestic demand was dull due to an inauspicious period for Hindu
weddings.
Rajiv Popley, a director of jewellery trading firm Popley Gold, said the
volume of new ornaments sold in exchange for old gold at his
showrooms had almost doubled in the past one month.
"Inflow of recycled gold has shot up as high prices have attracted
many consumers to dispose off their old jewellery," said Prithvi Raj
Kothari, a gold importer.
Traders buy the metal from consumers at slightly lower than market
prices and sell the recycled gold at below import costs to jewellers.
"The import business is very poor at the moment," said Narendra
Singh Rathore, a gold trader based in Jaipur, a leading gold importing
centre. "Traders are waiting for some stability in the prices before
resuming imports."
Spot gold was quoted at $349/350 an ounce at 7:20 am GMT in Asia,
up from late New York $348.90/349.50 on Friday. It was traded at
about $319 a month ago and at $279 a year earlier.
Local prices track global trends as India imports 70 per cent of its
annual gold requirements of 750 to 800 tonnes.
World gold prices have soared on weakness in the US dollar and
political tensions over Iraq and North Korea. Prices of the safe-heaven
metal tend to rise when the dollar weakens as bullion becomes
cheaper to non-US investors.
Popley said traders would feel comfortable to import gold if prices
dropped to $342.
Traders said imports could rise after two weeks, even if global prices
remain firm, as domestic supplies would not be able to cope with
demand when the wedding season starts in January.
Jewellery accounts for about 85 per cent of India's annual demand for
gold, and forms an essential part of Hindu weddings as parents gift
the metal to their daughters for financial security.
Gold demand in India fell 8.5 per cent to 116.4 tonnes during July to
September from the third quarter of 2001. Imports fell 12.4 per cent to
87 tonnes during the period.
CLOSE QUOTE:
~~~~~~~~
COMMENTARY:
My sense is that the unsettling discovery of lower karatage older jewelry being recycled for higher karatage items of jewellery as India attempts to change over to the Vienna Convention prefaced in prior posting...
will add negligible new tonnage to the demand side of the Gold Mining equation.
I suspect, older baubles will just be downsized in the trade up to higher karatage, instead of new demand being the result of such recycling...maintaining some sort of cultural exchange standard on either $ value of new bauble or exchange karatage old weight for smaller but equal weight of higher karatage dowery baubles.
I find it totally ironic that the greed of the jewelry trade underkarating practices there have sewn the seeds of the reticence to continue funding parental dowerys by means of gold. How very short-sighted, and how utterly human!
There were mentions elsewhere in the Economic Times publications around this timeframe that addressed the current increased interest in diamond funded dowerys as well as platinum funded doweries.
THAT would be an interesting development, and certainly "bearish on the come" to future Hindu offtake so necessary to the current cyclical upward pressures on gold.
Personally? I'm pulling for platinum to win out.
gold & platinum_tutor |
