Tuesday, August 30, 2011

Gold Sales in India May Increase 25% During Festival Season

From Bloomberg:

Gold demand in India, the biggest user, may surge 25 percent during the festival season this year as buyers expect prices to extend a record rally on haven demand, according to Rajesh Exports Ltd. (RJEX)

Purchases of gold jewelry, coins, bars and medallions may climb to 250 metric tons in the three months ending Nov. 30, compared with an estimated 200 tons in the same period a year earlier, said Rajesh Mehta, chairman of Rajesh Exports, India’s biggest jewelry maker.

Rising Indian demand may help extend a 26 percent rally in prices this year that’s made the precious metal the second-best performer on the Thomson Reuters/Jefferies CRB Index of 19 raw materials. Imports may reach a record 1,000 tons this year as investors seek a haven against inflation and volatility in stock markets, Prithviraj Kothari, president of the Bombay Bullion Association, said Aug. 20.

“In spite of the high prices, we have seen quite good demand,” Mehta said in a phone interview yesterday. “When people are buying jewelry, their motive is investment.”

Buying gold is considered auspicious during the religious festivals in India. The festival season this year starts with Eid this month and ends in October with Diwali, which is followed by the traditional wedding season......read on

Greenspan: Gold is a Currency, Euro “Breaking Down”

From The New American

Written by Alex Newman

Former Federal Reserve boss Alan Greenspan (left) made headlines this week when he said gold is indeed a currency and noted that the euro was falling apart, contradicting top officials on both sides of the Atlantic. “Gold, unlike all other commodities, is a currency,” he told attendees at a conference in Washington D.C. on August 23, saying he did not think the precious metal was in a bubble despite recently reaching a new record above $1900. And a flight to safety amid inflation fears is what’s causing soaring gold prices.

“The major thrust in the demand for gold is not for jewelry,” Greenspan explained. “It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.”

While it is well known that the fiat U.S. dollar is under increasing pressure following years of extreme “quantitative easing,” the former central banker said the European single currency was also in big trouble. And the effects will be felt far beyond Europe.

“The euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system,” said Greenspan, speaking at the Innovation Nation Forum hosted by an outfit described on its website as “one big Government IT community.”

He also said a breakup of the euro was “obviously” a possibility. And the monetary and banking woes are actually raising fundamental questions about the nature of Europe’s currency experiment itself.

“The problem is that there is a growing cleavage in the economic and analytical and banking circles as to whether the euro, which is the crucial issue here, should be 17 countries,” he said, citing widely varying beliefs among the different nations in terms of the role of government, inflation, and other cultural issues.

As The New American recently reported, the European Central Bank is now printing even more money to buy government debt. Floundering regimes from Spain and Italy to Ireland and Portugal are struggling to stay afloat as the ECB and the EU frantically seek to prop them up.

A default by the socialist government ruling Greece is almost inevitable at this point, with European governments rushing to unload onto taxpayers the bad debt held by banks. And according to Greenspan, the problems swamping Europe are hurting the U.S. economy — and they could even lead to another American recession.

“The reason we are so sluggish is the level of uncertainty,” he explained. "The general feeling out there is of a lull before the storm."......read on

Mike Maloney's journey into precious metals

Record prices spawn new wave of China gold bugs

By Fayen Wong

SHANGHAI | Mon Aug 29, 2011 4:11am EDT

(Reuters) - Record gold prices, rather than denting China's enthusiasm for bullion, have emboldened investors to plough more money into gold bars and riskier bullion-based derivatives.

August is traditionally a slow month for Chinese jewelers, but many shops in Shanghai visited by Reuters reported surprisingly solid gold sales over the last few weeks, with shoppers unfazed by gold's stellar price gains over the past few months.

"The surge in prices has sparked another gold-buying craze. The 50 gram and 100 gram gold bars were selling like hot cakes," said Ms. Liu, a store manager at Shanghai's major jeweler Lao Feng Xiang Co Ltd, who said gold sales this month were up at least 30 percent from a year ago.

The attitude of Chinese consumers -- expected to soon overtake Indians as the world's top buyers of gold -- will be an important influence on longer-term trends.

Demand from the world's most populous country, which is adding hundreds of thousands of people to the ranks of affluent and middle-income consumers every year, implies that the long-term price floor for gold is set for a steady increase.......read on