Online Edition of India’s National Newspaper
APRIL 15, 2009
CHENNAI: Against the prevailing gloomy economic backdrop, gold remains the safest way to secure savings, according to World Gold Council Vice President, K. Shivaram. Even amid the equity market crash, gold has given more than 28 per cent returns in the recent period, which makes it the best investment option, he emphasizes.
Slump is temporary
With supply from the mines coming down, prices are expected to go up further, he predicts. Countries such as Russia and China are increasing their quantum of gold reserves as the dollar is increasingly volatile. Despite a reserve of 338 tonnes of gold, India needs to invest in more gold and show the way to the rest of the world, he avers.
Attributing the recent slump in gold rates to the move by certain countries, in the wake of the decision taken at the G-20 summit, to sell one-eighth of International Monetary Fund’s gold holdings to bolster economies, Mr. Shivaram says the slump is temporary. He points out that the value of gold has never plummeted to unexpected levels.
People in India have been making strategic investments in gold through periodic purchases. The awareness level of gold as an investment is high here.
South India’s share
India accounts for 24 per cent of the world’s gold demand, which is likely to grow. South India accounts for nearly 40 per cent of India’s gold purchases. The share is still higher during the season of Akshaya Tritiya, he told The Hindu.
The festival, which has gained prominence after 2001, has given a fillip to many retailers. “In 2001, we observed that a couple of retail outlets were getting more than their share of business during this period, and the reason they cited was ‘Akshaya Tritiya.’ We did detailed research into the Hindu almanac and passed on the importance of the festival across all outlets to encourage people to buy gold.”
The WGC also launched promotional initiatives to coincide with the festival.
Charting the pattern of the growth of the business, he said major gold purchases were initially only for weddings.
But soon festivals began providing people a reason to plan their investments by buying the yellow metal.
With the economic slowdown evident across all sectors, the sale of gold too has witnessed a slight fall.
“But the value of gold has not come down and the investors got incredibly high returns when other sectors felt the heat.”
In India, over 74 per cent of customers prefer gold investment in the form of jewelery. The rest buy it in the form of coins or bullion.
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