Indians’ gold holdings soar over $100bn in a yr

The beauty of gold lies not only in its glitter, but also in its ability to make you happy in bad times. Its glitter pierced through the gloom of the financial slump with the yellow metal emerging as the safest investment the world over. A day before Lehman's bankruptcy, an ounce of gold could be bought at $784. Three days later it hit $922 in global markets. In India, the per 10 gram price of gold correspondingly jumped from Rs 11,640 to Rs 13,541.      As the financial crisis deepened, nervous investors bought gold to preserve their wealth. By February 19, 2009, prices went up to $ 1007/ounce (Rs 16,090/10gm). It softened in last week of February 2009 as global macro economic factors started showing positive signs and money started chasing stocks again. After a slight dip, prices have come back to peak levels of around $1,000/- ounce and Rs 16,000/10gm at present. Investors today view gold as a hedge against high inflation and a weak dollar.      While Indian gold consumption is low, prices are soaring because of globaltrends. Even if we assume that privately held gold in Indian households has remained stagnant at 15,000 tonnes in the last one year because of slackening demand, the value of this holding has gone up from $ 378 billion then to $ 482 billion now, factoring in the change in dollar rates. Thank Lehman Brothers for this cool 27% gain of $104 billion. At today's rates, Indians with gold are richer by Rs 6 lakh crore.      "People tend to buy gold whenever there is uncertainty in the financial markets. Gold offers liquidity, convenience and value addition," says Ajay Mitra, MD, World Gold Council (India). Private gold holding in India is around 15,000 tonnes, according to WGC—the highest in the world. Compare that with the US government holding of just 4,000 tonnes.

Black pepper price dips as demand dries up

Exporters Keep Off As Prices Still On Higher Side BLACK pepper, which touched nearly Rs 170 per kg about a fortnight ago, is now a shade cheaper with traders going slow in picking up the spice on seeing a lull in demand for spice from local markets and exporters.      Responding to a flat demand for black pepper from local traders and exporters as well over the past few days, the pungent spice shed Rs 25 per kg and comes down to Rs 145 per kg on Tuesday at its main trading terminal at Kochi.      The climbdown in price has narrowed down the price differential between Indian black pepper and other origins, which consequently has brightened the prospect of pushing Indian black pepper into the export market, for both the premium quality Malabar Grade-1 and the average ASTA grade.      According to commodity analyst Angel Commodities, Indian prices of pepper in the international market are quoting at around $3,100 per tonne against $3,000/tonne, $3,150/tonne and $3,200/tonne, quoted by Brazil, Vietnam and Indonesia respectively.      Overall, an easy trend has surfaced in the global market following reports of arrival of the current year's crop from Brazil, noted Angel Commodities. Pepper production in Brazil is estimated at 30,000-32,000 tonnes in 2009.      Due to a price differential of over $200/tonne between Indian and other origins, black pepper exports from India declined more than 28% to 6,750 tonnes in April-July, 2009.      However, the prospect of improving India's exports in the coming months has led speculators to bet for higher prices in futures trading. This has seen pepper quoting at Rs 14,930 per quintal for November delivery at NCDEX and at Rs 15,235 per quintal for December delivery. The prospect of rise in demand for the spice in the festive season, which is due to start from September-end, has also contributed to the bullish sentiment in futures trading.  WAIT 'N' WATCH  Traders are not in a hurry to pick up the commodity despite low price  Exports decline due to  price differential over $200 per tonne between Indian and other orgins

Gold funds outshine every other asset class

Coimbatore: The equity markets may be on a roll but gold has dazzled everyone bringing stellar returns to investors. Gold funds that invest in gold mining companies and overseas equity funds that have an exposure to such companies, have outperformed every other asset category in the last one year. AIG World Gold Fund topped the performance chart with a 52% return in one year (up to September 7). The other two gold funds —DSP Black-Rock World Gold Fund (44%) and Birla Sun Life Global Precious Metal (18% in year-todate) —also gave good returns. Sensex and nifty moved up 11% and 10% respectively during the period.      Gold funds beat the benchmark equity indices in the three-month and one-month periods as well. They have spurted 11% to 12% in the past week alone. Incidentally, these funds have outperformed even gold exchange traded funds (ETFs) that gained about 36% in the past year.      Gold ETFs, which invest only in the physical units of gold, get only the benefit of an upturn in the prices of the yellow metal. However, gold funds cash in on the improvement in fortunes of mining firms, which give higher returns than the yellow metal during a bull run, say industry observers.      Gold funds also managed to beat ETFs in the short run when gold prices jumped in March this year. Gold prices have spurted over the past few days on the back of renewed concerns about the sharp rally in equity markets and inflation fears due to excess liquidity in the system, say market observers. Spot prices of the yellow metal crossed the $1000-an-ounce mark on Tuesday, the highest since March 2008, according to Reuters data.      "Higher gold prices and improvement in profitability of mining companies have boosted sentiments,'' says Lakshmi Iyer, head (Fixed Income and Products) at Kotak Mahindra Mutual Fund. "Prices should be good for mining operations to sustain. Firms would be able to make profits at these prices.''  Hits $1k globally, pips Rs 16k at home  New Delhi: Gold on Tuesday touched a new peak of Rs 16,200 per 10 gram in the bullion market here on heavy buying ahead of the festival season amid the global rates breaching the psychological $1,000 an ounce level. Standard gold and ornaments gained Rs 200 each at Rs 16,200 and Rs 16,050 per 10 gram, respectively. Sovereign gold also shot up by Rs 50 to a new high of Rs 12,900 per piece of 8 gram. Marketmen said for the first time in more than six months, gold in the overseas markets crossed the psychological $1,000 an ounce level owing to a weak dollar and concern that inflation may rise in the future, boosting the precious metal's appeal. Surprising, gold, which moves opposite trends in stocks, is now moving upward along with surges in bourses. AGENCIESInvestors bet on frontline stocks as sensex rallies  Mumbai: The BSE sensex rose for the third consecutive session to a new 15-month closing high as investors concentrated in frontline stocks while booked profit in midcap and smallcap stocks. The sensex started the day on a flat note but picked up gains in mid-session, witnessed some profit taking near the close but closed with a 107 points gain at 16,132. At Tuesday's close, the index was double its early-March low of 8,047, which was also the low for 2009. Dealers said continuous flow of foreign funds and expectations that slowdown in the economy could be nearing an end, lifted investor sentiment.      The day's trading was also helped by a global rally in metal and commodities stocks. On the BSE too, the Metal index ended 2.5% higher while the Oil & Gas index closed 2% higher. On the flip side, dealers pointed out, that a rally in commodities has the potential to increase input prices for most of the manufacturing companies, and could affect their bottomline.      Among the sensex shares, metals majors Hindalco ended 6% higher at Rs 115 while Sterlite ended 4.8% up at Rs 740. Among other top sensex gainers were SBI, Reliance Industries and Reliance Infra, each ending between 3.5% and 4.5% higher.      The day's buying was again led by FIIs with a net buying figure of nearly Rs 1,000 crore. Domestic funds too showed a net inflow figure, at Rs 206 crore. While investors bought frontline shares, they also booked profit in nonfrontline ones.