Indian imports of gold and silver up 222%

Author: Shivom Seth
MUMBAI -

The import of gold and silver by India has risen by a whopping 222% between April and May 2011, as compared to a year ago. In the month of May alone, imports were a staggering $9 billion, with gold demand growing 25%.

"Even as inflation and a widening trade deficit to $15 billion in May continues to weigh on the minds of Indian investors, the demand for fresh gold has continued to grow. This is very confusing, especially when one sees it against the backdrop of a 400% rise in the value of the rupee over the last decade,'' said bullion analyst Anand Patnaik with a brokerage firm.

Imports of gold and silver were at $8.96 billion in May, a growth of 500% over the previous month and 222% over last year.

"Rapid inflation is eroding the earnings of the common man. One has to understand how the import of gold has reached $9 billion for a month, while the yearly average is around $22 billion,'' said Sudhir Chakraborty, bullion analyst at Standard Chartered bank.
"The gold story is puzzling,'' added financial analyst A S Kirolar. "Consumers are shying away from stocks and bonds and heading to safe assets like gold and real estate, but one cannot understand this given the meagre 12% growth in imports of petroleum and oil products.''.....read in full