You are here

South African gold companies pushed into survival mode

Section: Daily Dispatches

Analysts Expect Indian Plan
to Tap Idle Gold to Move Slowly

From Reuters via The Peninsula
Doha, Qatar
Sunday, March 27, 205

http://www.thepeninsulaqatar.com/Display_news.asp?
section=Business_News&subsection=market+news&month=March2005&file=Bus
iness_News200503272282.xml

MUMBAI -- For housewife Arpita Mohan, giving up her gold ornaments
in exchange for a certificate is the last thing she has on her mind.

"I feel good seeing myself in a mirror wearing a lot of jewellery,"
she said from Allahabad. "Given a choice, I will never prefer a
certificate. I will choose gold jewellery, wear and sell whenever
there is a need."

And like Mohan, traders and analysts said that there are thousands
of Indian households who would be reluctant to give up their gold to
take part in a savings scheme introduced by the government in its
budget for financial year starting April 2005.

India, the world's largest gold importer and consumer, announced
last month that mutual funds could launch gold exchange-traded funds
to enable people to buy and sell gold in units as small as about $2.
The units can be listed on stock bourses. Details of the scheme are
still being worked out.

Analysts say the move aims to attract investments in the metal from
other sectors and tap into the 15,000 tonnes of idle gold -- mainly
in the form of jewellery and coins accumulated by households over
generations -- for productive purposes.

Although some see the scheme as a positive move, many feel the
government has a tough job at hand.

"Gold is more than a metal in India. It's a culture. It's a part of
life," said Ranjeeth Rathod, a bullion dealer.

"And if a gold scheme takes away that culture from the Indian
community, I don't know how successful the scheme would be."

Gold exchange funds, commonly known as "paper gold" are traded like
stocks and holders are not required to physically buy gold. The
value of the unit changes with the metal price.

India, home to more than a billion people, imports about two-thirds
of its annual gold needs of up to 700 tonnes. Jewellery and coins
account for 85 percent of the country's gold demand.

Jewellery forms an important part of Indian weddings, as parents
give their daughters the metal for financial security. Hindus
consider gold an auspicious metal and like to buy or gift it during
religious festivals.

"I can't tell you that instead of a gold ring, I will give you a
certificate that you can wear around your finger," said Rajesh
Mehta, India's largest exporter of gold jewellery.

But there are many who see a silver lining in this.

"Instead of having a preconceived notion about the cultural
background, such innovative instruments should be tried out before
predicting their success or failure," said Rajan Mehta, executive
director of Benchmark Asset Management Company.

The company sought the nod of the Securities and Exchange Board of
India, the market regulator, way back in 2002 for gold exchange
traded funds, but did not get an approval.

It has again applied for approval.

"We feel that the structure of the scheme is quite superior and
gradually people will realise that."

Industry experts say lack of awareness in such schemes and other
modern investment plans and limited reach of banks and mutual funds
in the country, where more than 600 million people live in villages,
would restrict the popularity of the gold fund.

"It will take some time to penetrate. I don't expect very large
numbers right away," said Sanjeev Agarwal, managing director for the
Indian subcontinent of the World Gold Council.

Some say the scheme could first attract urban people who may try
investing a portion of their surplus money in the paper gold, or a
small section of investors who purchase gold bars and coins.

But rural India, which buys 70 percent of gold sold in the country,
is likely to stay away.

"Rural people still don't have adequate faith in the banking system.
How can you expect that they will be attracted toward something they
can't see?" said Dubai-based Nayan Pansare, chief financial officer
of Rosyblue Fze, a diamond and jewellery firm.

Traders say physical gold is facing a greater threat from rapid
urbanisation and invasion of consumer goods and electronic products
than the paper gold scheme.

Industry experts said if the scheme takes off, it would lift the
country's gold demand as mutual funds would be required to back the
units with equal amount of gold as an underlying asset.

The gold accumulated by the funds could be used for more productive
uses, such as lending to jewellers or to banks.

"It's better to bring idle gold into the banking system and use that
for the economic growth," said Bhargava N. Vaidya, a bullion
analyst.

The Indian economy, the fourth-largest in Asia after Japan, China,
and South Korea, needs massive funds to attain a growth target of
over 7 percent. It grew at an average of 6 percent since 1991.

The country attracted $4.68 billion of foreign direct investment
last year to March 2004, nearly half of gold bought by Indians
during the year.

----------------------------------------------------

To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

To unsubscribe, send an e-mail to:

gata-unsubscribe@yahoogroups.com

----------------------------------------------------

RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

http://www.jsmineset.com

http://www.cbs.marketwatch.com

http://www.mineweb.com/

http://www.gold-eagle.com/

http://www.kitco.com/

http://www.usagold.com/

http://www.GoldSeek.com/

http://www.GoldReview.com/

http://www.capitalupdates.com/

http://www.DailyReckoning.com

http://www.goldenbar.com/

http://www.silver-investor.com

http://www.thebulliondesk.com/

http://www.sharelynx.com/

http://www.mininglife.com/

http://www.financialsense.com

http://www.goldensextant.com

http://www.goldismoney.info/index.html

http://www.howestreet.com

http://www.depression2.tv

http://www.moneyfiles.org/

http://www.howestreet.com

http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kereport.com
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

http://www.resourceinvestor.com

http://www.miningmx.com

http://www.prudentbear.com

http://www.dollarcollapse.com

http://www.kitcocasey.com

http://000999.forumactif.com/

http://www.golddrivers.com/

Subscription sites:

http://www.lemetropolecafe.com/

http://www.goldinsider.com/

http://www.hsletter.com

http://www.interventionalanalysis.com

http://www.investmentindicators.com/

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

----------------------------------------------------

COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS

Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com

Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net

Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com

Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com

Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com

The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066

----------------------------------------------------

HOW TO HELP GATA

If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA

By credit card (MasterCard, Visa, and
Discover) over the Internet:

http://www.gata.org/creditcard.html

By GoldMoney:

http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $1,000 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled GATA.

Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.