GOLD SILVER PRICE NEWS ~ The Indian Gold market has reaffirmed its dominance in 2010 and will continue in 2011. Expect China to overtake the sub-continent in demand for gold. The love of gold in India goes far beyond a simple source of future profits. It is an expression of wealth, financial security and family stability. It also carries religious overtones.
Gold remains the wealth of the wife -men only inheriting assets. It represents her and her family's financial security. It is difficult to make a distinction between investment and jewelry demand because in India, these two ideas are inseparable. Gold jewelry is usually 24-carat.
Indian Gold Demand
18,000 tonnes of gold in India are held by households. Indian gold demand has grown 25% despite a 400% Rupee price rise in the last decade. Gold demand is strong and is expected to increase 30% by 2020.By 2020, cumulative annual demand for gold in India will increase to in excess of 1,200 tonnes or approximately Rs. 2.5 trillion, at current price levels. India's rapid growth, which will have significant impact on income and savings, will lead to more gold being purchased by almost 3% per annum over the next decade. Indian growth is expected to be around 10% GDP in the next decade, which will feed through into gold demand/savings.
In 2010, total annual consumer demand reached 963.1 tonnes.
Because gold is more than just money, its price is irrelevant in light of its demand. This demand is limited by an individual's access to money to purchase it. Indian demand for gold will be driven (like in the last decade) by savings and real income levels, not by price. In local currency terms, Indian jewelry demand more than doubled in 2010 to Rs.1,342 billion compared to Rs. 669 billion in 2009.
Indians are savers and save a steady 30% per annum. Of these savings (45% is stored in what the developed world considers the usual avenues of savings) 7% is spent on gold. Seven percent of India's $265 billion in total household savings is held in gold. These habits will not likely change.
Likewise, gold will continue to be purchased in the future Indian wedding seasons. It is all part of the social fabric of India. A wedding is the social highlight of the nation and can last for days. 50% of the population is under 25, and there will be 15 million weddings per annum over the next decade. At present gold prices and exchange rates, this will drive around 500 tonnes per annum with a further 500 tonnes of existing gold being gifted by one family to the next, which is not recorded in recycling. Read More
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