Gold and silver snapped up by bullish Indians
By Jack Farchy and James Fontanella-Khan
Financial Times, London
Friday, May 13, 2011
The sharp drop in gold and silver prices has stimulated a surge in buying from India in a sign that consumers in the world's largest gold-buying country retain faith in the decade-long bull story for precious metals.
Bankers have been surprised by the strength of Indian demand in the past week, when gold dropped below $1,500 a troy ounce and silver tumbled below $35 a troy ounce.
UBS and Standard Bank, two large bullion dealers, have enjoyed some of the strongest days of sales to India this year, according to analysts at the banks, while others reported a similar surge.
The buying from India, which accounts for a fifth of global gold demand and a 10th of demand for silver, comes as some investors in the west have cut exposure to precious metals and other commodities, spooked by a series of steep falls and the imminent end of quantitative easing in the US. Investors have cut their holdings of gold and silver through exchange-traded funds by 1.4 per cent and 5.7 per cent respectively in the past two weeks.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
But in Mumbai's bustling Zaveri market, the gold hub of India's wealthiest city, traders were suffering from no such jitters. Indeed, they were fiercely elbowing one another to grab as many shiny bars as possible last Friday amid expectations that falling prices would cause demand to soar.
"Tonight people will be invading the market to buy gold. ... I'm here to refill as I'm running out of bars," said Amit Soni, a vendor standing in the packed store with a bag of cash in one hand and his mobile in the other to monitor the sales back at his shop.
The apparent confidence of Indian consumers in a rapid price rebound could provide a floor for the market, analysts said.
Walter de Wet, head of commodities research at Standard Bank, said that gold would "continue to push higher" and touch new highs this year. "The metal has reached $1,500 and we expect it to consolidate above this level soon," he said.
On Friday gold was trading at $1,487, down 0.5 per cent on the week, and silver at $34.50, down 2.8 per cent on the week.
Indians traditionally buy gold for weddings or festivals, but traders say the nature of the market is shifting as gold and silver buyers become more speculative.
In common with many emerging economies, high inflation in India is driving investors into precious metals as a store of value when rising prices erode the value of their paper currencies. For that reason, many analysts and investors believe gold prices could soon resume their upward march and reach new record highs before the year is out.
Chhabil Jain, a Mumbai silver trader, said that demand for silver bars was going through the roof and that many vendors were starting to run low on stocks.
"People are booking incredible amounts of silver as they see the current drop in prices as a great opportunity to buy more ... most are buying for pure investment," he added.
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Wall Street Journal Publishes Lewis Lehrman's Call for the Gold Standard
In its April 26 edition The Wall Street Journal published an important essay by the Lehrman Institute's chairman, Lewis E. Lehrman, explaining why a gold-convertible dollar is critical to eliminating the shocking federal deficit.
"Experience and the operations of the Federal Reserve System compel me to predict that U.S. Rep. Paul Ryan's heroic efforts to balance the budget by 2015 without raising taxes will not end in success -- even with a Republican majority in both Houses and a Republican president in 2012. ...
"What persistent debtor could resist permanent credit financing? For a government, an individual, or an enterprise, 'a deficit without tears' leads to the corrupt euphoria of limitless spending. For example, with new credit the Fed will have bought $600 billion of U.S. Treasuries between November 2010 and June 2011, a rate of purchase that approximates the annualized budget deficit. Commodity, equity, and emerging-market inflation are only a few of the volatile consequences of this Fed credit policy."
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