CPM Re-Shuffles Statistics On India Gold Fabrication Demand And Investment
27 March 2012, 4:30 p.m.
By Terry Wooten
Of Kitco News
kitco.com
(Kitco News) --CPM Group revised its Indian gold demand statistics earlier this year to better distinguish between fabrication demand and investment, according to the CPM Yearbook 2012.
In early 2012, CPM said estimates of 2011 fabrication demand in India were reduced to 8.5 million ounces from 12.8 million ounces. The balance was shifted to investment demand.
The main reason for this re-categorization was a revaluation of what is considered ‘investment demand’ versus ‘jewelry demand’,” CPM said. “Over the past few decades a trend toward lighter colored gold jewelry, which is lower in karatage, has been emerging. Purchases of lighter jewelry, however, are more discretionary than purchases of 22K gold jewelry.”
CPM said the 22K gold jewelry remains the purchase of choice for savings purposes and wedding gifts. “That said, CPM Group decided to revise its statistics to more accurately reflect fabrication demand and investment demand trends in the country,” analysts said. CPM said it will now delineate between jewelry purchases purely for investment and purchases for jewelry as a discretionary purchase. The consultancy said such a distinction isn’t generally made, but it was important to do so in India.
“Because India is the largest gold market and the primary reason for Indians to accumulate gold is for savings, it is more accurate to categorize a portion of jewelry demand as investment,” CPM said. Investment has the greatest influence on gold prices, making it important to develop statistics that most closely depict the market for investment purposes.
CPM said India is the largest gold market in the world, accounting for about 12% of total gold fabrication demand, 30% of global scrap supplies and nearly 70% of net private investment. The country is a major importer of gold and exports gold to other countries for use or scrapping.
India’s imports may drop sharply in 2012, however, because of high gold prices and increasing taxes imposed by the government. Some Indian jewelers have been on strike to protest import duty hikes in the government’s recent budget.
In a recent survey by Reuters, the president of the Bombay Bullion Association estimated that 2012 gold imports could fall to 450 metric tons, down 53% compared to the 969 metric tons imported in 2011.
China, however, continues to press India for the top spot in gold.
The World Gold Council, in its annual report in February, said that it is “likely” China will emerge in 2012 as the world’s largest gold market, given the 2011 numbers. |
