C A S H I N G O U T

Parag Dave AHMEDABAD

THE yellow metal has come to the rescue of the crestfallen investors. Burdened by heavy debt since the January bear hug, investors have been shedding off their gold to pay their outstanding dues. Amid increasing price of gold, bullion markets across Mumbai saw close to one tonne of gold ornaments being sold off by investors, pushing trade volumes up by 200%, while in Ahmedabad volumes jumped by 50%.
    While the Sensex nosedived 40% since January 2008, gold shot up by Rs 4,750 per 10 gm (between July 16, 2007-July 16, 2008), giving respite to investors. Mumbai bullion markets that used to buy back 10 kg gold jewellery from the market daily before January 2008, saw volume shoot up to 30 kg no sooner the market crashed. In Ahmedabad too, volumes surged from 8 kg per day to 12 kg.
    "Many players maintained their positions in the market till the Sensex touched 18,000 points. However, they gave up their positions once they started facing liquidity crisis. Under those circumstances, many players sold gold ornaments to sustain in the market," said Malav Shah, research head of Ahmedabad-based Monarch Projects and Finmarket, adding "The amount of difference to be paid also increased, compelling them to sell off their gold ornaments in the markets. Though real estate and fixed deposits could have been used, gold ornaments were the ideal alternative for them owing to high returns."
    Suresh Hundiya, president of the Bombay Bullion Association told ET that on account of heavy losses in the stock market, the investors had sold gold ornaments in the bullion markets. The investors sold about 400 kg of gold ornaments within two days in Mumbai following crash in the stock market on January 21, 2008. Since January, investors have sold nearly one tonne of old gold ornaments in the Mumbai bullion markets till now, he added. The gold proved to be a "boon" for investors in the stock markets said Harshvardhan Choksi, president of Manekchowk Choksi Mahajan (Ahmedabad).