Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (2448)	6/12/2007 9:53:53 PM
From: LoneClone	Read Replies (1) \| Respond to of 194482

Indian farmers may lose healthy appetite for gold mineweb.com Source of significant investment demand may disappear as Indian farmers move to cities and the country continues its industrialisation. Author: Tessa Kruger Posted: Monday , 11 Jun 2007 JOHANNESBURG - A considerable source of investment-related demand for gold could disappear as millions of Indian farmers move to cities or join industrialisation in India. The Fortis/VM Group said in a recent Yellow Book article a great gold market driver to watch in the short and longer term, is whether India's rural poor continue to invest in gold during times of stress and transition, or if they will secure their income in alternative ways. The Indian rural poor still account for two thirds of annual gold purchases in the country, despite its emerging middle class. But millions of Indian farmers are expected to move to urban centres over the long-term as they seek greater wealth and their farms disappear in the midst of industrialisation. The Indian government is looking at policies to move India's 200m subsistence farmers into manufacturing to address their exposure to unsustainable land practices and to ensure that rural populations contribute to India's extraordinary economic growth. Small scale farming in the country is also under threat from the vast debt burdens of small farmers - a symptom of a wider breakdown in agriculture due to a decline of public investment in agriculture, among other factors. This anticipated shift away from small-scale farming into larger-scale agricultural development and increasing urbanisation could have a considerable impact on India's gold demand. Small-scale farmers have traditionally used spare cash to invest in small pieces of jewellery, as they favour gold above paper assets in times of economic and political uncertainty. But gold - as the most esteemed medium of exchange for the country's rural communities - will come under increasing pressure as India's land use and tenancy changes over the next decade. Significant amounts of small pieces of gold investment jewellery are likely to re-enter the market as farmers dispose thereof to fund a new start in larger towns and cities. This trend would be influenced by factors such as the levels of government compensation for land, existing debt burdens and cost of relocation and the accuracy of titling of land deeds. A counter possibility is that the loss of one measure of wealth in rural India, land, may lead to a concentration in the other, gold. However, a lack of clarity on the rate and nature of savings in India does complicate the picture. Household savings and the number of banks have increased and physical gold ownership plays a slightly different savings role as a result. A third possibility is that these farmers "make it" in an urban environment and start demanding gold for adornment as they fully participate in India's booming economy. "Although it is clear that middle class Indians will increasingly have a number of luxury items to choose to spend their money on, gold is likely to remain a high priority." Changes in gold demand will depend on whether India's rural poor will continue to invest in gold. But if the move away from traditional patterns of employment and income for subsistence farmers reduce the tiny amounts currently available for investment, the possibility emerges that this source of investment-related demand for gold will stop.