Gold jewelry forms around 80 per cent of the Indian Jewelry market, with the balance imprisoning fabricated studded Jewelry that includes diamond and gemstone studded Jewelry. Besides, India is world’s largest cutting and polishing Industry for diamonds, well supported by government policies and the banking sector with around 50 banks providing nearly $3 billion of credit to the Indian diamond industry. A predominant portion of the gold Jewelry manufactured in India is consumed in the domestic market.
However, a major portion of the rough, uncut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond Jewelry. Gold is the principal raw material for making Jewelry in India. In 2007 gold had a market share of SIS$ 12. 24 billion (RSI 550 scores), while diamond had a market share of SIS$ 2. 56 billion (RSI 1 1 scores). Eighty per cent of the gems and jewelry industry in India is dominated by gold and the rest is controlled by diamond and gemstone industry. This trade in India is mainly fragmented as 96 percent of total business comes from unrecognized sector. Enabling investors to protect their wealth Igniting and sustaining the desire to acquire and treasure gold Jewelry Being industrial uses of gold and protecting existing ones Supporting the social and environmental sustainability of the gold mining industry Being the voice of the industry The gold market in India is predominantly a market for buying and selling physical gold. Indians have a huge fascination for gold. This is evident in the fact that India is the largest consumer as well as importer of gold in the world.
Gold plays a very important role in the social, religious and cultural life of Indians. Indian Gold Market looks poised to achieve greater heights given the fascination for gold in the country. India consumes about 800 MET of gold which accounts to about 20%consumption of gold globally. More than 50% of this is used for making gold Jewelry. Gold is valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits. India is also the world’s largest consumer of gold in Jewelry as investment. 4 Gold is also considered as a public investment.
Many countries have huge gold reserves. Countries like India, USA are supposed to have huge gold reserves that can be sold in times of need. It also gives these countries an edge in various financial deals. Various banks also have huge reserves of gold that are used in times of crisis in the economy. This gold is sold at times of economic crisis to stabilize the economy. Gold is considered better during times of recession. Gold is purchased more during a down turn in economy. This is because the companies might start reducing production due to declining sales.
Due to this, the stock prices will go down. In this scenario, Gold is the safest option to invest in. Though the return on investment may not be as high as other investment options, safety and good value for money are very important in times of recession. The importance of gold in the Indian gems and Jewelry sector is significant. It is expected that the Gems and Jewelry industry would enjoy a growth of about 8. 5 per cent in the period up to 2015. It is also estimated that about 600 tones of gold is used to make Jewelry.
This made the country become a leader in the table of most gold consuming nations with the consumption amounting to about 16,000 tones. The other key markets include Japan, China, Turkey, Italy, USA and I-J. In the year 2008 India had a gold consumption rate of 24 per cent, according to the report Indian Gems and Jewelry Market Forecast to 2013,” by research firm RONDOS. The sector is expected to register a compound annual growth rate (CRAG) of 13 per cent during 2011-2013, according to a report “Indian Gems and Jewelry Market Forecast to 2013,” by research firm RONDOS. India will soon overtake the US to become the third-largest men’s luxury Jewelry market in the world, according to Euro monitor International. The study estimated that the country’s men’s Jewelry market stood at around RSI 954 core (SIS$ 194. 4 million), in sales and it is projected to grow by 36. 4 per cent in 2012. Action. Gold and precious gems have played a pivotal role in the Indian social fabric and economy. Precious gems and Jewelry are a part and parcel of Indian traditions and customs.
Gold has traditionally been valued in India as a savings-and investment vehicle and even today, continues to be the second most popular instrument after bank deposits. Today’s gold market is a round-the-world, round-the-clock business, played out largely on dealers’ trading screens. The core of the business, however, remains in the key markets of London, as the great clearing house, New York as the home of futures’ riding, Zurich as a physical turntable, Istanbul, Dublin, Singapore and Hong Kong as doorways to important consuming regions and Tokyo where the Commodity Exchange (DOTCOM) sets the mood of Japan.
Even Paris still has a small market, a reminder of the days when the French were great hoarders, while Bombay (Iambi) has increasing importance under Indian’s liberalized gold regime that permits official imports through local markets. 3 These regional markets reflect the growing pattern of liberation’s of the gold trade since the early sass’s. Until then, many countries either forbade the direct import of old, or imposed high import duties, so that smuggling was substantial to countries such as Turkey or India.
Today, however, relaxation has meant that local markets and exchanges can flourish legitimately. Consequently the pattern of gold flows from mine to end-user, whether in Jewelry, industry or investment, is more direct. This pattern has also been influenced by growing gold production, particularly in Australia and the United States, which are now major sources of supply for Asian markets. 3 India India is the largest market for gold Jewelry in the world, representing a staggering 746 tones of gold in 2010.
Indian consumers are actively engaged in considering their next piece; 75% of women say they are constantly searching for new designs. Whilst over 50% of gold Jewelry is bought for weddings, the wedding anniversary has now become the most aspiration occasion for receiving gold today, extending a couple’s relationship with gold beyond the marriage ceremony. The festival of Tanner’s, the most auspicious day in the calendar Just before Dalai, has traditionally created a strong seasonal surge in sales.
However, the strategic development of the Sashay Trinity festival in May, together with leading trade ratters, has seen phenomenal recent success; sales during that period grew over 28% in the last year. Indian’s culture and mythology embrace gold. And Indian’s traditions of unparalleled craftsmanship and skill are exemplified by the country’s gold Jewelry manufacturing, with the majority of pieces still made meticulously by hand. Each region’s symbols and designs are reinterpreted in gold which is overwhelmingly high in cartage. L China tones of demand in 2010.
Chinese consumers look for the very highest level of purity; more than 80% of gold Jewelry in China is made from pure 24 carat gold. In today’s China, gold takes centre stage in the wedding ceremony as a promise of a long and happy future together; this year, around 6. 6 million brides will receive gold at the centre of their rituals. Indeed, as a result, over 75% of all urban Chinese women now own more than one significant piece. As the Chinese economy radiates wealth into rural communities, we anticipate that levels of ownership and participation in gold Jewelry will continue to rise across the nation.
Two thirds of Chinese women regard gold Jewelry to be as much an investment as a statement of arsenal style; consumers are keenly aware of the value of what they own. But the same majority also state that wearing gold Jewelry every day makes them feel wonderful; in China, the logic of gold seems to be perfectly complemented by its magic. L United States The US accounted for 129 tones of gold in Jewelry during 2010, making it one of the world’s most significant consumer markets. The US market is dominated by gifting where over 50% of the total value of gold Jewelry at retail is created by pieces over $1 ,OHO.
Unsurprisingly, two thirds of American women say they think of heir gold Jewelry as an investment, but one to be treasured and handed down to future generations. 72% of US women feel that gold is an everlasting gift. Birthdays, anniversaries and the traditional holiday season dominate occasions for gifts of gold but there is a sustained trend towards a gift for “no special occasion”. Perhaps men have begun to see gold, unlike other forms of Jewelry, as spontaneous and profound; increasingly, the intimate, personal nature of gold Jewelry combines a public statement with a tender, private message. GEMS & JEWELRY SECTOR IN INDIA Gems and Jewelry play a significant role in Indian customs and traditions, making this sector integral to the economy and one of the fastest growing industries in the country. Worldwide, the gems and Jewelry industry has been growing at a good pace and is currently estimated at over SIS$ 130 billion. In India, it accounts for nearly 20 per cent of total Indian exports. It provides employment to 1. 3 million people directly and indirectly.
Indian’s gems and Jewelry industry has been allowed 51 per cent foreign direct investments by the government in single brand retail stores attracting both global and domestic players to this sector. The burgeoning retail industry in India is instrumental in innovative marketing and branding diamonds and traditional Jewelry, making inroads in this sector and contributing to the nation’s economy. According to a report released by Technocrat Advisors on Changing Retail Landscape in India, the Jewelry and watches market is pegged at about SIS$ 13. 52 billion. It is expected to register a 12 per cent growth by 2012, touching SIS$ 23. 4 billion. Indian’s economic boom in the country has translated into a large nonuser market for Jewelry and other luxury products, offering a lucrative opportunity for major brands to make their foray into the Indian market and establish their presence. Experts believe that by 2013, India will become the biggest consumer of Jewelry. The history of the Indian gem and Jewelry, a $30-billion industry, began and flourished in the two leading States of Maharajah’s and Gujarat. Exports from the industry fetched $17. 1 billion in 2006-07 against $16. 64 billion in decline due to recession. As the gem and Jewelry companies are based out of
Iambi, the city is home to various types of Jewelry from the traditional to the high-end designer fashion Jewelry. It is one of the largest producers and exporters of Jewelry, which is estimated to be over $13 billion. Prominently, it accounts for over 15 per cent of the world Jewelry fabrication pie. Not only this, India is one of the fastest growing markets for Jewelry, growing at the rate of 10. 20 per cent per annum over the last five years. Today, the Indian consumer market for Jewelry is said to be $13. 1 billion, an increase of close to 8 per cent over the previous year.
A duty by KEMP says that India is set to realize total Jewelry sales of $21 billion by 2010 and $37 billion by 2015. Currently, out of the eight key world retail markets, the US is number one accounting for 31 per cent of the Jewelry sales. India and China follow with 8. 3 and 8. 9 per cent respectively. According to the KEMP study, Indian’s growing importance in the global Jewelry market is only expected to increase in the future. The total demand is expected to reach $18. 25 billion in 2010 and to $ 28. 28 billion in 2015. Diamond Jewelry consumption in India is estimated to Jump by 78 re cent in 2010. GOLD By 325 BC the Greeks had mined for gold from Gibraltar to Asia Minor. In 1848 AD John Marshall found flakes of gold whilst building a sawmill near Sacramento and so triggered the gold rush in California. Held securely in national vaults as a reserve asset, gold has an irrefutable logic; released from the tombs of pharaohs and emperors alike, gold has an undeniable magic. Since the 14th Century, gold’s purchasing power has maintained a broadly constant level. To put this in practical terms, an ounce of gold has repeatedly bought a mid-range outfit of clothing.
This as true in the fourteenth century, when an ounce of gold was worth El . 25 to El . 33; it was true in the late 18th century and it remained true at the beginning of this century (2000 to 2008), when an ounce of gold averaged IEEE or $472. Even the exchange rate between gold and commodities has been relatively constant over the centuries. History of Gold Gold was first discovered as shining, yellow nuggets. “Gold is where you find it,” so the saying goes, and gold was first discovered in its natural state, in streams all over the world. No doubt it was the first metal known to early hominids.
Gold became a part of every human culture. Its brilliance, natural beauty, and luster, and its great malleability and resistance to tarnish made it enjoyable to work and play with. Because gold is dispersed widely throughout the geologic world, its discovery occurred to many different groups in many different locales. And nearly everyone who found it was impressed with it, and so was the developing culture in which they lived. Gold is the easiest of the metals to work. It occurs in a virtually pure and workable state, whereas most other metals tend to be found in ore-bodies that pose mom difficulty in smelting.
Gold’s early uses were no doubt ornamental, and its brilliance and permanence (it neither corrodes nor tarnishes) linked it to deities and royalty in early civilizations. Gold has always been powerful stuff. The earliest history of human interaction with gold is long lost to us, but their associations with the gods, with immortality, and with wealth itself are common to many cultures throughout the world. Early civilizations equated gold with gods and rulers, and gold was sought in high value on gold, equating it with power, beauty, and the cultural elite.
And since old is widely distributed all over the globe, we find this same thinking about gold throughout ancient and modern civilizations everywhere. Gold has always had value to humans, even before it was money. This is demonstrated by the extraordinary efforts made to obtain it. Prospecting for gold was a worldwide effort going back thousands of years, even before the first money in the form of gold coins appeared about 700 B. C. In the quest for gold by the Phoenicians, Egyptians, Indians, Hitters, Chinese, and others, prisoners of war were sent to work the mines, as were slaves and criminals.
And this happened during a time when gold had no value as ‘money,’ but was Just considered a desirable commodity in and of itself. L The gems and diamonds industry contributes over 1 5 per cent of Indian’s total exports. The industry is Jewelry industry is predominantly divided into two segments: Gold Jewelry and fabricated studded Jewelry (diamonds as well as gemstone studded Jewelry) *India consumes nearly 800 tones of gold accounting for about 20 per cent of the world gold consumption….. Of which nearly 600 tones goes into making Jewelry. Study by KEMP reveals the Indian Jewelry market to be SIS$ 13. Lion in fiscal 2006-07, accounting for 8. 3 per cent of world Jewelry sales. *According to The World Gold Council (WAC) total gold supply in the second quarter this year stood (CHAFFY) at 840 tones, whereas the demand was 944 tones. 3 The demand for this precious and finite natural commodity occurs in many geographies and sectors. Around 60% of today’s gold becomes Jewelry, where India and China with their expanding economic power are at the forefront of consumption. In East Asia, India and the Middle East, gold has powerful cultural meaning, accounting for approximately 70% of the world’s gold Jewelry in 2009.
But Jewelry creates Just one source of demand; investment, central bank reserves and the technology sector are all significant. Each is driven by different dynamics, adding to gold’s strength and independence. In creating supply, gold mining companies operate on every continent of the globe. This broad geographical dispersal means that issues, political or otherwise, in any single region are unlikely to impact the supply of gold. Beyond mine production, recycling accounts for around a third of all current supply. In addition, central banks can also contribute to supply should they sell part of their gold reserves.
It is worth noting that after 18 years as net sellers, collectively central banks are now effectively net buyers, causing not only a significant decrease in supply but a corresponding, simultaneous increase in demand. Dry. David Davis, (2007) has carried out research to forecast the gold price. It also defines the drivers of the gold price. The drivers which are looked upon in this paper are economic environment of the US economy, demand and supply and exchange rates. Higher oil prices will likely result in inflationary pressures, which in turn will likely hedge. Gold price increases simultaneously with USED/RUE exchange rate.
Increased investments demands, gold consumption and diminishing mine supply have already begun. The supply demand imbalance will lead to gold price hike. As per the future estimation in the article the gold price will reach up to RSI. 2800 per Going. 2 Joel Noreen and Martin Leftover 2006 have predicted the investor’s outlook in the near future for investing in gold by discussing dependent variables of gold like inflation, USED, consumer demand and production of gold. It is difficult to anticipate investor’s intentions. In the near future gold price would certainly follow upward trend which would be more attractive to investors.
The objective of Eric J. Levin* & Robert E. Wright, (2006) was to identify the short run and long run determinants of gold price. These determinants are inflation rate, USED exchange rate, gold lease rate, credit risk default premium and political risk. Empirical analysis result shows that the prices of gold and general price level in the USA are related. I. E. US inflation and long term price of gold. The short run determinants are mainly supply and demand and gold lease rate. Whereas long run determinants are inflation rate or inflation volatility, credit risk and USED exchange rate. 2
Greg Attack From Research Department Bank of Canada (2007)have analyzed using the data of 14 countries for which countries, if any, gold could potentially serve as a useful indicator of Inflation. The facts and figures of inflation and gold price relation of several countries is concluded in the result. In Canada if gold price rises by 10%, inflation rate rises by 0. 25% over next months. In New Zealand 10% increase in gold price causes 1 increase in inflation rate in next 24 months if the exchange rate remains the same. Rate of return are higher for countries like New Zealand, Australia, Sweden.
Countries such as Japan and US, power of gold for inflation is much weaker. In china if gold price increases by 10%, inflation rate goes up by 1. 2% for next 12 months. 2 Paul Molesters, 2007 The main objective of this paper is to discuss various aspects of gold market such as supply and demand, transparency and intervention in the gold market and warnings by gold market. Data used is since 1970 to forgo gold price and oil price. He concluded that the gold price is strongly affected by lesser supply, as the natural availability has limitations. Gold price also gets affected due to the change in oil price.
The objective of the paper written by David Greedy and Jeff Currie, 25th March 2009 is to discuss various aspects of gold as a commodity and is there any association between interest rate and gold price. This paper says that the gold price drivers are exchange rate, interest rate and consumer price index. There are other factors involve for hike in gold prices like supply and demand, monetary demand and non monetary demand of the gold. Monetary and non monetary demand does play a role in deciding the price of the gold. Also there is link between real interest rate and pricing of gold as currency. 2
