Bullion

TM
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www.bombaybullion.com August 2011
Market Summary
B
ullion markets were dominated by two most
important events during last month. Euro zone
debt crisis with regards to Greece dominated in the
rst part and the second part the focus was on raising of US
debt ceiling before August 2nd deadline to avoid potential
default and on threat to downgrading of US AAA rating
and on renewed prospects of quantitative easing in the US.
US Fed Chairman Bernanke in its last month testimony to
US congress said that the Fed stands by to provide additional
monetary stimulus (i.e QE3) if economic conditions warrant
it. This in turn boosted the market sentiment and helped
gold to breach the May 2011 record highs.
European leaders have agreed a new 109bn bail-out of
Greece on July 21st, 2011 under which private bondholders
will be called on to participate for the rst time, contributing
a target of a further 37bn.
In addition to the 109bn in new loans from international
lenders, the agreement includes a commitment from
Europes leaders to support Greece until it is able to return
to the nancial markets.
The House of Representatives on August 1st nally
approved a deal to raise the U.S. borrowing limit, after
weeks of uncertainty in the nancial markets, thus averting
a catastrophic debt default by the worlds largest economy.
A day before the deadline to lift the debt ceiling, the
passage by the Republican-controlled House of the $2.1
trillion decit-cutting plan hammered out over the weekend
cleared the way for the Senate to approve it.
The overall scenario in the euro zone is complicated by
an ugly run of data including weaker-than-expected growth
gures and a worrying drop in economic condence, and
by an unexpected slowdown in ination. Moreover there
are question marks whether ECB would continue to hike
the interest rates in the fourth quarter of this year.
Precious metals may stay at current elevated levels on
the back of US economic slow down, which may delay
in Fed hiking the interest rates for an extended period of
time and on moderating manufacturing activity across
the globe and more importantly on uncertainties over
debt concerns in the euro zone and US. Hence any
correction in gold is temporary and unlikely to drag for
a longer duration.
Economic Indicators
The US economy continued to face one problem or other.
Some improvement was seen in labour market and mixed
trend witnessed in housing markets. But on the other hand
manufacturing activity deteriorates and US GDP growth
slowed down substantially.
Initial unemployment insurance claims dropped to 398,000
in the week ending July 23, 2011, which were 24,000
below the previous weeks upwardly revised 422,000 level.
The four-week moving average, which normally provides a
better indication of the underlying trend in labour markets,
dipped to 413,750 from 422,250 the previous week and it
has fallen for four consecutive weeks and now stands at the
lowest since late April 2011.
The housing markets in US witnessed a mixed trend with
the sale of new home sales in US fell 1 percent in the month
of June to an annualized rate of 312000 units, the lowest
in three months. At the same time US pending home sales
unexpectedly rose in June by 2.4%, followed by an 8.2%
gain in the month of May, as buyers tried to take advantage
of lower prices and borrowing costs.
Spot Market Review
August.indd 10 8/9/2011 4:34:16 PM
August 2011 www.bombaybullion.com
The United States real gross domestic product increased at
an annual rate of 1.3 percent in the second quarter of 2011,
according to the advance estimate released by the Bureau
of Economic Analysis. First-quarter growth was revised
down sharply to a 0.4 percent from the previous estimate
of 1.9 percent.
Manufacturing activity in the U.S. almost stalled in July,
threatening to undermine the two-year recovery of one of
its main drivers. The Institute for Supply Managements
factory index slumped to 50.9, the lowest since July 2009,
from 55.3 a month earlier. Figures less than 50 will signal
contraction.
U.K., Russian and Australian manufacturing shrank, while
the pace of factory growth slowed in Europe and China,
according to latest reports. Indias manufacturing growth fell
to a 20-month low of 53.6 in July, due to more expensive inputs,
according to HSBCs Purchase Managers Index (PMI).
Commitment of Traders (COT) report (Futures and
Options combined)
COMEX Gold July 26 June 28 % Change
Combined Open Interest 791632 703831 12.48
Combined Commercial Long 240699 241949 -0.52
Combined Commercial Short 557631 481806 15.74
Combined Non-Commercial Long 300143 232841 28.91
Combined Non-Commercial Short 30654 38284 -19.93
Overall open interest in Gold climbed by 12.48% when
compared with last month. Interestingly commercials
increased their short position signicantly by more than
15.50%. Speculative long positions increased by close to
29% have resulted in recent sharp bullish momentum in
gold prices. Based on the latest cot report gold overall up
trend is intact.
COMEX Silver July 26 June 28 % Change
Combined Open Interest 178162 159867 11.45
Combined Commercial Long 41998 47650 -11.86
Combined Commercial Short 94586 83417 13.39
Combined Non-Commercial Long 37049 28692 29.13
Combined Non-Commercial Short 5182 7129 -27.32
Silver net combined open interest increased by 11.45%.
Commercial long declined by close to 12%. But non-
commercial long positions increased by 29.13 resulted in
recent upward bias in silver. Speculative short positions
trimmed by more than 27%.
Note:1) Commercial trader is a classication used by
the Commodity Futures Trading Commission (CFTC) to
describe traders that use the futures market primarily to
hedge their business activities.
Note:2) Non-commercial refers to a trader on a futures
exchange who conducts transactions on commodities for
speculative reasons.
Indian Spot Market
Gold
Gold spot Mumbai prices after having reached the low of
Rs 21700 on July 1st bounced back sharply and touched
the new historic high of Rs 23357 on August 2nd, 2011.
Prices continued to trade within the multi year broader
ascending channel signalling room for further upward
bias and Rs 24000 is not far away. In case sustains above
Rs 24000 for more than a week or so then one cant rule
out Rs 24500-Rs 25000 levels in the medium term. At
the Same time on the lower side strong support is seen
at around Rs 22500 and most probably to hold that
support level. Overall bullish momentum in gold is all
set to continue and any intermediate correction should be
considered as good levels to accumulate.
August.indd 11 8/9/2011 4:34:17 PM
Disclaimer: The given outlook is based on the research done at
Foretell Business Solutions Private Limited, Bangalore. Foretell will
not be responsible for any kind of losses incurred by any party either
directly or indirectly based on this report.
Silver
Silver spot Mumbai prices after two months of consolidation
settled substantially well above the triangle formation in
the last few weeks signalling resumption of the bullish
momentum. In the last one month silver prices traded in
the range of Rs 51967 and Rs 59107. One can anticipate
silver prices to retest the April highs of Rs 64000 initially
and above to extend till Rs 67000 levels. At the same time
on the lower side strong support is seen at around Rs 57000
and then at Rs 55000 and unlikely to drop lower.
Silver spot is most likely to trade in the broader range of Rs
55000 and Rs 67000 levels in the coming one to two months
time period.
COMEX and MCX Gold
COMEX Gold futures October11 contract made a new historic
high of $1675.3/oz as on August 3rd, 2011. In the last one month
or so gold prices have gained by nearly 14%. Technically prices
continued to hold the multi-year trend line signalling overall
bullish momentum in gold to continue in the coming months.
On the higher side one can expect prices to face stiff resistance
in the range of $1720 and $1750 levels. Only if the price sustains
above $1750 on a weekly basis then one cant rule out $1800 and
above in the coming few months time period. At the same time
on the lower side $1550 to act as strong support and only below
one can expect some sort of correction till $1480-$1460 levels.
In MCX Gold Octover11 contract in the last few weeks
continued to trade well above the symmetric triangle formation
signalling room for further upward bias in the coming one to two
months time period. In the last one month or so prices traded in
the range of Rs 21885 and Rs 24245 and in the process breached
the April month historic high Rs 23511 levels. Expect the current
bullish trend to continue and to hit the break out target of Rs
24700 levels in the coming few weeks time period. At the same
time strong support is seen at around Rs 23080 and below to
drop till Rs 22880-Rs 22650 levels. Technical indicator Price
ROC-12 reading is weall above the mid-point and moreover
consolidating above the W-formation signalling room for further
strength in gold prices.
COMEX and MCX Silver
COMEX Silver December11 contract after two months of
consolidation once settled well above $40/oz indicating further
appreciation in silver prices. After having reached the low of
close to $33.40/oz silver prices bounced back strongly and are
currently trading well above $41/oz as on August 3rd, 2011. On
the higher side one can foresee silver to trade as high as $46-$48
levels and only if it settles well above the historic highs of $50
and above to signal continuation of the bullish trend. On the
lower side strong support is seen at $38 and then at $35 levels.
Overall expect silver to trade in the broader range of $35 and
$48 levels in the coming one to two months time period.
MCX Silver Dec11 contract prices continued to hold support
around Rs 52000 levels on a weekly basis and in particular in the
last two weeks settled well above Rs 60000 signalling room for
further appreciation in silver prices. In the weekly chart prices
are trading within the ascending channel hinting the possibility of
further bullish sign and to touch as high as Rs 65300 initially and
then to move higher towards Rs 68000 levels. As far as Rs 53700
is not violated, then expect the current bullish move to stay and
to trade in the broader range of Rs 53700 and Rs 68000 levels.
August.indd 12 8/9/2011 4:34:19 PM
Six Month Gold
Forecast
________________
Chris Vermeulen & David Banister
www.MarketTrendForecast.com
G
old has been on a torrid rally since the October
2008 lows of $683 per ounce and is likely to top
out around $1733 to $1805 per ounce according to
our forecasts and crowd behavioral based patterns we use.
Back in August of 2009 we had forecasted a coming ve year
massive rally in Gold and Gold stocks from the $900 per
ounce level, and since that forecast Gold has rallied about
78% in just under two years of time! Our methodology
centers around my personal interpretation of what are called
Elliott Wave patterns or waves. This is a behavioral based
theory developed by R.N. Elliott in the 1920s and 1930s
way before we had charting software or anything close.
The problem is interpreting the patterns is very difcult
and much like a combination of both art and science.
With that said, Elliott Waves tend to go upwards in a 5
wave pattern and correct in a 3 wave pattern during bull
cycles. There are many variations on the theme, but that is
the simplest of explanations. Gold in my opinion is now
completing the nal 5th wave of a 5 wave bull pattern that
began in October of 2008 at $683. After a suspected and
projected $1000 plus rally topping out at $1733 on the low
end to $1805 on the high end, it should form an intermediate
peak in Gold and begin a multi-month correction that will
be largely sideways with a few startling drops along the
way. The one caveat being that 5th and nal terminal
waves in a 5 wave sequence can be notoriously difcult
to forecast ahead of time. They can extend and go much
higher than typical, so our forecasted levels near term are
$1643 and $1689 which would be very typical pivot points
followed by pullbacks, and then onward to the higher 1733
to 1805 levels.
Below is our long term chart for Gold and where we stand in
the wave patterns. Over the next 6 months its likely that Gold
will be no higher than $1805 and probably lower. Gold is in
a 13 year Fibonacci rally cycle and still has about three years
left to run, but soon should pause in the upward trajectory:
August.indd 13 8/9/2011 4:34:19 PM
I
t is not often that a company, in a very short span of
time, rubs shoulders with some of the existing giants in
the industry. Having said that, RiddiSiddhi Bullions
Limited (RSBL) is certainly one such company. Established
in the year 1994, it has been amongst the market leaders in
providing wholesale and retail level bullion delivery in the
spot, forwards and futures markets in India. Today, RSBL
is Indias largest bullion trading company with an annual
turnover of over Rs 22,900 crore (US$ 5bn) and a credit
rating of SME 1 from CRISIL Ltd, which is the highest
rating on the SME rating scale. The companys promoters
have a combined experience of over 100 man-years in the
industry.
RSBL has consistently been ranked amongst the top 10
unlisted public companies in India by Business Standard
1000. It is also one of the largest delivery participants
across major Indian commodity exchanges and is awarded
STAR TRADING House status under the EXIM policy
of Ministry of Commerce, Government of India. RSBL
is one of the only ten nominated agencies for import of
bullion in India and also one of the few Indian companies
to associate with the London Bullion Market Association
(LBMA) and Bombay Bullion Association (BBA). RSBL
holds reputation amongst LBMAs good delivery members,
international suppliers and banks.
RSBL - Name with Vision
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RSBL is an Authorised Participant (AP) with all the
Gold Exchange Traded Funds (ETFs) in India and ensures
liquidity in each of them. It is also the largest creator and
redeemer of such Gold ETF units in the country.
Our expertise, brand equity and vast presence, have helped
us successfully launch numerous products. Our agship
product RSBL Spot is Indias rst fully electronic over-
the-counter (OTC) delivery based bullion-trading system
and arguably the most successful in the world. It has over
1500 online clients and numerous delivery centres across
India including Ahmedabad, Surat, Rajkot, Indore, Pune,
Kolkata, Hyderabad, Bangalore, Chennai, Coimbatore,
Vizag, Vijayawada, Coimbatore etc. with the head ofce
located in Mumbai. Over 90% of its bullion sales take place
through RSBL Spot.
An extension to the dominant RSBL Spot, has been an
online distribution and pricing system for coins in India,
RSBL Coins. Its a one of its kind system providing
delivery of gold and silver coins through an online network.
Pricing is most competitive and quotes are always given
two-way. Parallel to that, RSBL also continues to run its
classic model of retail coin distribution and it is a leader in
that. These coins are available in different shapes and sizes
to meet individual requirements and can also be customized
to meet gifting/corporate requirements. RSBL Coins have
been randomly certied by RBI and hallmarked by BIS.
The packaging comes with a tamper proof seal and meets
international packaging doctrine. We also offer buyback
facility of our coins at the ongoing market rates.
RSBLs Optionally Convertible Debentures (OCDs) is
another innovative product, which takes advantage of the
price differences between gold spot/forward and futures
prices of the commodity. The product has been a huge
success and besides capital protection, has consistently
provided the investors with a return of over 15% per annum
since its launch in 2007.
RSBL recently launched Bullion++, a revolutionary
product that would generate an additional lending income for
the investors of gold and silver. As people buy apartments
and give them on rent, they can buy gold or silver and lend
them. Thus, it provides the investors with an opportunity
for dual income: from the likely price appreciation and
from the lending income. Moreover, the investors need not
worry about purity, storage charges, theft and insurance
hassles. Investors can also choose non-lease model where
the bullion is just stored.
Promoters of RSBL have lent their expertise to the physical
bullion market. One of the most important feats achieved
was that of the INR denominated Bullions. Since it is purely
based on spot international prices, it drowned the markets
with a greater liquidity. One of the promoters, Mr. Prithviraj
Kothari was recently elected as the President of Bombay
August.indd 15 8/9/2011 4:34:23 PM
Bullion Association (BBA). He is also on the Advisory
Board of National Commodity & Derivative Exchange
Ltd. (NCDEX) and Multi-Commodity Exchange of India
Ltd. (MCX). RSBL has played a key role in the success of
MCX by suggesting the implementation of gold and silver
alternate trading month contracts.
RSBL is a prestigious member of the Export Promotion
Council for EOUs and SEZs with units based in Surats
Special Economic Zone (SEZ).
RSBL has received ISO 9001:2008 Certication from
Moody International for Quality Management System.
RSBL has received Golden Arm Award from MCX for
highest volumes of gold delivery given and taken on MCX
since inception.
RSBL had also been bestowed with Best Bullion
Dealer award for the year 2009 by Bombay Bullion
Association.
RSBL Sales Turnover
August.indd 16 8/9/2011 4:34:23 PM
C
an you summarise the reforms in Indian
bullion markets during the last 15 years?
Indian bullion markets have seen signicant
changes, in phases, since 1992-93, beginning with placement
of gold import under Special Import Lisence (SIL) and then
permitting nominated agencies such as MMTC, STC,
HHEC, PEC and select banks to import gold for export
purposes in 1997. Later, Star Trading Houses and Premier
Trading Houses meeting certain qualifying criteria were
also given nominated agency status. Regulated commodity
marketplaces were created to permit futures trading in gold
and silver in 2002. Permission to launch Gold ETF under
the supervision of SEBI was given in 2007. Lastly, in the
last budget, the anomaly in the customs duty structure
in dore and gold bullion bars was set right, paving way
for resurgence in bullion rening. In all, the government
has executed a very well thought out plan of calibrated
reform.
Going forward, what needs to be done so as to make
Indian Bullion industry a global reference market?
First and foremost thing to do is to waive duty on bullion
BBA
President
Speaks
import. Internationally, bullion is considered as a currency
and hence not taxed. Duty is imposed only on jewellery.
Secondly, permit export of bullion through banks without
the mandatory 3% value-addition criterion (for bullion
only). This would ensure two-way movement of gold
bullion through proper channel and help Indian markets
integrate with the global markets. So, to make India a global
reference market, there should be no duty so that bullion
traders can import and export freely, or there must be some
specialized system through which they can offset the duty.
Opportunities for gold/silver minted products in India.
Growth rate, growth drivers, players in the market;
value proposition; challenges
At present, all minted products in India is coming from
imported gold. May be, one or two tons of gold is coming
August.indd 17 8/9/2011 4:34:24 PM
from domestic mines, but basically most of it is imported. We
import gold and then convert it to small bars / coins and then
sell it to the market. In the past, 85 90 % of the purchase used
to be plain gold jewellery, while bullion bars and studded
jewellery formed the rest 10 %. The trend is changing now.
Jewellery sale has come down to 70 percent, while the
purchase of bullion bars/coins has gone up to 25 percent.
People are changing their purchase practice also because of
the high making charges involved in jewellery (wastage/
making charges amount to 8 to 10 % of cost of purchase).
What is your opinion on bonded warehouse in India?
For the amount of gold that we consume and the
unpredictability in the demand, there is need for opening
LBMA approved bonded warehouse. It will help us save
50 cents to each ounce of gold purchased and when the
country is importing 950 plus tons of gold in a year, the
saving will be huge. This will also facilitate Indian traders
to export bullion to neighbouring countries like Singapore,
Bangladesh, China etc. There is a huge opportunity for
opening Indian market to international as India is the
biggest consumer of bullion products. So if the logistics are
available in India, it is a huge opportunity for the country
to export.
Your view on Gold ETF market in India
Gold ETF is one of the best segments to invest. If one has
money and demat account, one can invest in Gold ETF.
This is hassle free, easy to buy and sell and cheaper than
physical gold. It is a paper gold and hence there is no need
to store it physically. In India, however, the rural people
are not participating in this segment because they have
no demat account. Globally, ETF market is growing 100
percent year-on-year. We have to be patient and encourage
people to invest in gold ETF.
What are the reforms you would like to see in Silver
markets?
To develop silver market, rst of all, introduce silver ETF.
Silver is an extremely volatile commodity. To carry silver
from one place to another is problematic and then storage is
another issue. Hence, for retail investors, silver ETF is the
best product as it provides systematic investment of small
amount without having to encounter storage problem.
RSBL also has minted product. What is the difference
between your product and products offered by banks or
other nominated agencies?
Unlike jewellery, bullion is priced only on the basis of
purity of 0.999 or 0.995. As long as purity is assured, it
does not matter as to who is selling it. Whatever RSBL sells
or banks sell are all imported gold. Branding is applicable
only in jewellery. Secondly, banks sell minted products
on consignment basis, as they are not permitted to take
direct exposure. Besides, they have a higher cost structure
and hence higher mark-up. Lastly, banks are not allowed
to hedge. That is, why banks do not buy back. In RSBL
platform, people can buy or sell minted gold at any point of
time. This is RSBLs uniqueness.
Who should regulate silver ETF, SEBI or FMC?
It does not matter who regulates silver ETF. Thing is, the
industry and the investors require silver ETF and so it
should come under either of the regulators. If silver ETF
is considered as a commodity, then it should come under
FMC; if it is considered as paper product, then it should
come under SEBI.
As President of BBA, what you want to do?
Our goal is to make Mumbai the global hub for bullion.
Towards this, I request the government to give industry
status to bullion. We should be permitted to import and
export of bullion freely through banks, with transparency
and full tax compliance.
August.indd 18 8/9/2011 4:34:24 PM
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August.indd 20 8/9/2011 4:34:25 PM
A Bankers
Perspective on
the Indian Bullion
Industry
Scotia Bank
________________
Johnson Lewis
Market Scenario:
I
ndia imports around 700-800 tonnes of gold each
year and it is estimated that India owns over 18,000
tonnes of above ground stocks, worth approximately
USD 900 billion. The majority of this gold is imported
via nominated agencies and Banks like Scotiabank.
Most of this gold reaches the end consumer in the form
of jewellery via jewellers big and small. The jewellers
have been an important part of Indias nancial and
socio-economical landscape, providing an investment
avenue in the form of gold/gold jewellery that can be
readily liquidated anywhere and anytime.
The supply of gold bullion in India is dependent on
nominated banks and agencies. The Banks cater to
bullion dealers, jewellery manufacturers and retailers.
The largest amount of physical gold is procured by
the bullion dealers and resold in the market. This
gold reaches the end consumer via the value chain.
The industry at the bottom of the pyramid is largely
disorganized and fragmented. GJF, (All India Gems &
Jewellery Trade Federation) estimates the number of
licensed gold dealers at 250,000 and 450,000 certied
gold smiths spread across India.
With the rise in disposable income in households,
and growing consumer preference for gold both as
an investment and adornment, jewellers will need
to expand their retail outlets ...
August.indd 21 8/9/2011 4:34:25 PM
The jewellers segment includes large national brands
like, Tanishq, TBZ, and very strong regional players
like GRT, Prince, Joy Alukas etc. This segment of
jewellers has been well serviced by the banking system
hence these customers enjoy pricing power due to
erce competition amongst banks.
The nancial crisis of 2008 has lead to banks
becoming stricter in terms of compulsory external
rating, increasing capital etc. This tightening has lead
to re-rating of jewellery business and to new standards
being set by professionally managed companies. The
traditional family-owned businesses are now catching
up and improving their balance sheets.
With the rise in disposable income in households,
and growing consumer preference for gold both as an
investment and adornment, jewellers will need to expand
their retail outlets and increase their inventory holdings
to be able to capitalize on the market. This change will
entail increasing working capital nancing from banks
either as cash credit or as gold loans which are more
cost effective. There is increased awareness about
various banking products and utilizing banking channel
for nancing working capital and project nancing.
Challenges:
The bullion banking industry is faced with a unique
situation. Some of which are listed below:
Financial strength on paper: Balance sheets of these clients
are a challenge as they are never a true reection of their
ourishing business, net worth or liquidity positions.
The low disclosures on the balance sheets mean that the
customer is not bankable as per current credit norms from
the banks perspective. This adversely affects the ability of
the company to expand their business.
Gold price appreciation: Many clients feel that they have not
been able to gain from the gold price appreciation. If they
had bought the same gold using cash credit, their liability
to the bank would have remained the same and they could
have beneted from the gold price appreciation.
Logistics: On the vaulting agents front, there are problems
with respect to setting-up vaults in Tier 2 cities as the Vaulting
Agents do not have a signicant presence and other ancillary
business to support their operations. The Tier 2 cities account
for a major portion of the business given the increasing
afuence and preference for branded and quality products.
The vaulting and logistic providers will need to review
their strategy to see how they can capitalize on this segment
which is expected to drive growth over the next decade.
Policy Action:
Over the past decade the Indian bullion industry has
signicantly matured. The market currently has several
participants from Bullion Banks, Government Agencies,
Premier Trading Houses, Precious Metal Exchanges,
Gold ETFs, However, the market needs policy action
from the regulators for further growth of bullion industry
in India. This regulatory support must be complemented
by the jewellers taking proactive steps to re-examine their
business models and make changes to make the business
more robust and transparent.
Appropriate steps to standardize conduct and professionalism
between market practitioners themselves and their clients
will go a long way in augmenting the industrys ability
to strengthen its status as a major provider of service and
revenues to the government.
Nominated Agencies
Bullion Dealers
Jewellery Manufacturers
Retail Jewellers
August.indd 22 8/9/2011 4:34:26 PM
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August.indd 23 8/9/2011 4:34:26 PM
1) Could you share with our readers the types of gold
bars circulating in the world gold market currently?
For Dubai Good Delivery (DGD), the bars range from
minimum 100 grams moving up to 1 kg bars (kilobars), 3 kg
(COMEX 100oz bars) and 12.5 kg bars (large bars). Large
bars are widely circulated in the world gold market and are
regarded as the standard denomination for physical delivery
on most international derivative exchanges. There are many
other denominations in circulation, which can vary basis local
or regional preferences, eg 10 Tola bar, 5 Tael bar
2) What is "Good delivery bars" in gold? What are the
primary criteria for meeting the good delivery?
Good delivery bars in relation to DGCX contracts are Gold
bars which conrm to DGCX contract specications (1 kg bar
of .995 purity as per Dubai Good Delivery Standards) and are
of the brand and renery approved by the exchange (Details
of approved brand/renery is available at http://www.dgcx.ae/
Clearing.aspx ).
3) How many gold reneries are approved under the
good delivery system?
As of date, there are 20 DGCX registered reneries ( http://
www.dgcx.ae/Clearing.aspx ) producing Good
Delivery bars. The bars produced by these
reneries which conrms to DGCX contract
specications can be used for physical delivery
against the DGCX Gold Contract.
4) What is the total production of good
delivery bars annually? What is the estimated
market size at present?
Specically for DGD, we have 20 reneries,
each of whom produce at least 10 tonnes of
gold annually, therefore it is safe to assume that
minimum production of at least 10 tonnes of
DGD gold bars on an annual basis from each of
these approved reneries. (It is not possible to
determine the total production or the estimated
market size at this stage)
5) Why good delivery bars are only conned
to professional bullion market?
DGD bars (i.e. reneries that produce DGD Gold) are
regulated by the DMCC rules and regulations. The DGD rules
provide strict guidelines for the production of good gold and
silver. Reneries that are accredited to DGD are subject to
stringent checks on annual and ad-hoc basis with regards to
environmentally friendly methods of production and consistent
quality of gold/silver bars.
The DGD rules and DMCCA monitoring of reneries establish
trust and condence amongst professional bullion market
participants to utilize DGD bars for their day-to-day trading
activities for gold traders, bullion banks, derivative exchange
participants, etc.
6) What role do professional vaults play in retaining the
integrity of good delivery bars?
Professional vaults ensure proper safe keeping, recording/
accounting and storage of Gold without any damage to its
quality and ensures proper tracking of gold. DGCX has four
approved vaults (http://www.dgcx.ae/Clearing.aspx ) for
Gold which facilitate physical delivery of the DGCX Gold
Contract.
Dubai Good
Delivery Bars
Eric Hasham, CEO, DGCX
August.indd 24 8/9/2011 4:34:27 PM
When all Hell goes
wrong..There
is Haven to rely
upon!!!!!!
________________

Mr. Ram Pitre (Head- Research)
Ms. Pinky Shah (Analyst)
ITI Investor Services Ltd
G
old is unique commodity due to its properties
such as physical demand, reserve currency, safe
haven, ination hedge, technical application and
so on. This makes it most sought after commodities. Hence,
there are various factors that drive the gold prices. Gold
had a eleven consecutive day of gains, something it has not
achieved since mid-October 2006, when it rose for nine
days in a row. Gold prices have hit a high of $1623.95/
oz and are on record high. We all know that gold is the
fall back position when the world markets are struggling.
Investors love gold in times of turbulence and in time of
nancial crisis gold is the king of investments.
Gold prices are highly correlated to movement in currency
market. Over the past few months there has been a growing
amount of interest in the currency markets, especially the
pound, the euro and the dollar. There are two major factors
driving the value of the euro; interest rate differentials and
the European debt crisis. At this stage, only the debt crisis
is having an impact on Forex trading. The Euro has been
dragged through fresh skepticism by the Greek crisis, and
the dollar continues to be questioned as the reserve currency
of choice. Market has become highly sensitive to market
rumors, happening. Lots of events occurred. However,
focus still continues to be the euro zone and its crisis, its
bail out and the US debt situation also leaves the dollar in a
growing state of uncertainty.
Money Pouring into Safe Havens in Q22011
Source: Bloomberg
There has been lots of uncertainty across the globe. Tensions
are building as Greeces sovereign crisis, US debt situation
and legislative inaction in US is keeping the market on toes.
Hence, money keeps owing into the safe havens like Swiss
Franc, Japanese Yen and king of crisis situation- Gold.
Risk appetite of investors has been falling. Investors have
withdrawn from the riskier assets and currencies of Emerging
Markets.
Correlation of Currency and Gold
Gold is widely regarded as a currency in its own right
and thus, during times of US dollar weakness, gold often
increases in value as many investors choose to own gold
rather than US dollars. Australias role as a major producer
of gold and other commodities means the Australian dollar
is seen globally as a commodity currency. Currently the
correlation of Australian Dollar and Gold is at 87%
Source: Bloomberg
August.indd 25 8/9/2011 4:34:28 PM
With the currency volatility
and the debt-contagion risk
in Europe, investors are
gravitating toward something
tangible like gold. Dollar has
been weakening on back of
US scal decit and prospects
of QE-3. Euro fundamentals
dont appear to be too strong
either. Fears of sovereign crisis
spreading to Italy, Portugal and
Ireland remain high. However, rising of rates by ECB from
1.25% to 1.5% is giving support to euro. Also, ECB and EU
remain united in efforts to avoid default of any euro zone
nations. This is taking Euro higher and in turn supporting
gold.
Euro zone Crisis
Continuous on and off of euro zone crisis has been
supporting gold since the year end 2010. As the credibility
of sovereign-debt situations continues to worsen, the
credibility of the underlying at currencies will continue to
come into question which will keep supporting Gold. With
Italy, Spain, Ireland and Portugal worries intensifying and
Greece bailout still a huge question investors are eeing to
gold. Added to the mix, Moodys rating agency unexpectedly
slashed Irish government bonds to junk status which sent
borrowing costs to the highest levels since Ireland joined
the Euro zone. The International Monetary Fund and
European Union rescued Ireland last year with an enormous
emergency loan. Since then, fellow debt-laden euro zone
nation Portugal has also been forced to seek an EU-IMF
bailout, while Greeces rescue has been deemed insufcient.
European leaders have agreed
a new 109 billion bailout
package for Greece under
which private bondholders
will be called on to participate
for the rst time, contributing
a target of further 37 billion.
Ireland has won from euro
zone leaders a reduction of
around two percentage points
in the loans it gets from the
European Financial Stability Fund, and greater exibility in
how it uses the bailout money, Irish Prime Minister Kenny
said. This has given temporary relief to the crisis. However,
markets are somewhat disappointed with the lack of details
on reform of the EFSF.
US Debt Issue and Prospects of QE-3
The debt situation also leaves the dollar in a growing state
of uncertainty. If Congress is forced to make serious cuts
in the Obama administrations proposed budget, it should
strengthen the U.S. currency but further legislative
inaction and the very real specter of a U.S. debt default could
just as easily provoke a run on the dollar. President Barack
Obama failed to win agreement from the U.S. Congress to
reduce the government decit. Lawmakers are working on
budget cuts as they attempt to prevent an American default
before an Aug. 2 deadline. Congress is in talks aimed at
raising the $14.3 trillion U.S. debt ceiling before Aug. 2,
the date when the government is projected to exhaust its
borrowing authority. The dollar fell as a bipartisan Senate
plan to cut the U.S. decit and increase the debt limit faced
resistance from House Republicans.
The United States may lose its top-notch credit rating in the
next few weeks if politicians fail to increase the countrys
legal borrowing limit and the government misses debt
payments, Moodys rating agency has warned. Standard &
Poors placed the US rating on negative outlook on April
18th which meant a downgrade is likely in 12-18 months.
Contd on page no 28
August.indd 26 8/9/2011 4:34:28 PM
August.indd 27 8/9/2011 4:34:28 PM
This week S&P said theres at least a 50 percent chance it will
cut the AAA rating within 90 days on risks a stalemate will
endure beyond any near-term deal to raise the U.S.s debt
limit. . A lower credit rating would cause havoc in nancial
markets around the world and increase borrowing costs for
the US government and businesses, further harming public
nances and weighing on the economic recovery.
US Labour Market
Lack of recovery in US labor market is further lending
support to gold. Non Farm payrolls does not show sign
of recovery and US Unemployment rate has risen to 9.2%
from 8.8% in early 2011. The US economy added just
about 18,000 new jobs in June even as the unemployment
increased marginally, a government report showed. The
rise in payrolls was signicantly lower than the 105,000
forecast by economists. Meanwhile, the unemployment
rate rose to 9.2% last month from 9.1% in the preceding
month, the Department of Labor said. The data for April
and May were revised down by 44,000. Overall, the gain
for May was revised downward to 25,000 from the initial
report of 54,000.
Source: ITI Research and Bloomberg
Ination and Gold
Ination pressures among advanced as well as developing
nations remain high. Higher inationary pressure lends
support to gold prices. Ination in China accelerated to a
three-year high in June as the consumer price index (CPI)
increased 6.4 percent, according to the National Bureau
of Statistics. The CPI had risen 5.5 percent year-on-year
in May. Inationary pressures over the Euro zone remain
mostly unchanged as the year-on-year gure held at 2.7%
in June while the monthly result was at. The core CPI
gure over the year however edged up to 1.6% from a
previous 1.5%.
Source: Bloomberg and ITI Research
Currency and Gold Outlook:
More than rupee strengthening it has been the Dollar
weakness which is holding INR appreciation. As long
as US government doesnt come up with the concrete
solution for its debt problems dollar will be hammered.
But it looks unlikely that US will let it default. It will
nd solution on its debt problem and that would give
some support to dollar. Euro region leaders have found
some solution to their crisis but still whole mechanism
has to be worked out. Hence, it will be the swiftness in
action of the decision makers that would determine which
currency will hold strong in the long run. For shorter
duration, moving with the markets would be advisable.
Aussie Dollar continues to be strong as Gold keeps hitting
new records. Producer prices rose 0.8% q/q and 3.4% y/y,
but signaling continued pipeline pressures for the Australian
economy, despite the rmer AUD, and would imply that the
Reserve Bank of Australias attention should be on hiking rather
than cutting rates. This also should support Aussie Dollar.
Contd from page no 26
August.indd 28 8/9/2011 4:34:29 PM
Trend Support Resistance
Strong Stronger Strongest Strong Stronger Strongest
USD/INR
Bearish On a Break &
Close below 44.15
44.15 43.20 42.97 44.71 45.68 47.21
AUD/USD
Bullish as long as price
trade above 0.9830
1.0112 0.9548 0.8637 1.1023 1.1587 1.1935
EUR/USD
Bullish as long as prices
remain above 1.3698
1.4145 1.3698 1.3145 1.4592 1.5172 1.5503
Gold Bullish 1573 1541 1491 1623.95 1693.83 1731.08
EUR/USD (SPOT) Monthly Chart
AUD/USD (SPOT) Monthly Chart
August.indd 29 8/9/2011 4:34:30 PM
August.indd 30 8/9/2011 4:34:31 PM
August.indd 31 8/9/2011 4:34:31 PM
Gold is the ultimate form of payment in

the world so said Alan Greenspan a few
years ago. In fact, gold has been acceptable
as currency, sought after as a security and
invested in for returns ever since history
was rst recorded. During exceptional times, like today,
investors are ploughing in huge amounts of money into
gold in all its forms bars, coins, ETFs, structured
products, even in gold mining companies. As long as the
health of the global nancial ecosystem remains suspect,
this trend is likely to continue. In fact, several western
countries have wait times of up to a month after ordering
because of the huge demand for gold coins, especially
American Eagles and South African Krugerrands. One
of the key reasons for this unprecedented gold
rush is the lack of investment alternatives.
Global interest rates are touching zero and
there is a lack of condence in other markets
such as equities and real estate. Add the fear of
ination and the debasement of the US Dollar due to
quantitative easing and you have a situation tailor made
for investment into gold. Retail participation is clear from
the fact that at the end 2010 ETFs and similar products
held a substantial 2,177 tonnes of bullion. In India too,
gold ETFs are growing at 100% yoy but the base is small
yet we have several listed on our exchanges.
Of the several ways to invest in gold, one of the popular
ones in western countries is via structured products which
typically have a pre-set formula for calculating risk as
well as returns and are therefore popular with a large
set of the investing public abroad. The investment is
structured i.e. the investor knows the upside as well as the
potential downside at the time of investment. Even the
time period of investment is clearly spelled out. Consider
this against a simple position in the futures market where
neither the time horizon, gains, losses nor the investment
(MTM) is known beforehand. Normally, full or partial
capital protection on investments linked to returns on
Potential for Gold
Based Structured
Products
Jayant Manglik, President,
Religare Commodities Ltd
gold is a standard feature of such structured products and
clients nd this characteristic of the product particularly
appealing. So investors looking for downside protection
along with gains from the upside are attracted towards this
product. This addresses concerns of the risk-averse investor
set. While indices are the most common underlying for
this product, the rush towards gold investment has made
many companies use gold as the underlying in response
to customer demand. Though these can be customized for
August.indd 32 8/9/2011 4:34:31 PM
Investors are quickly latching
on because it provides a
combination of exposure to
gold uctuation, yield and
principal protection and has
received good reviews from
existing users.
large clients, the popularity in the retail space has led to
standard off-the-shelf products. In practice, structured
products would have variable exposure to debt and gold
(or equity) but it would be pre-xed at the time of sale. The
underlying could also be derivatives, and frequently is. With
gold being the hottest asset class today, some structured
products have already been launched and many more are
on the anvil. In India, mostly equity-linked and gold-based
structured products are sold to HNIs. The major issuers of
structured notes in India include Barclays Capital, Citibank,
JP Morgan, JM Financial, Edelweiss Capital and Kotak
Securities. And while there is no ofcial data about
the size of this industry, it has been variously
estimated to be currently between Rs 4000 and
Rs 6000 Cr and growing fast.Of course, the sustained
upward movement in gold has helped in no small measure.
The product itself can be very simple about 80% of the
money is put in bonds so as to reach 100% in, say, three
years and the rest is invested in a
derivative position (like options)
so that you can participate in gold
movement. The tenure is generally
18 months to a few years and the
ratio of the investment in bonds and
options can vary depending on your
risk appetite.
Investor demand will decide
which products turn out to be most
successful those with zero or low risk with limited returns
or those with lower capital protection but higher potential
returns. The complexity of the payoff and the structure
will vary with the product design and different products
will appeal to different client segments depending on their
risk prole. Structured products not only let you benet
from rising rates and prices; they even let you optimize
returns when the markets are moving sideways. And you
can even make money in falling markets. Various products
can be used for this, depending on market expectations.
Inevitably, as the situation evolves, new regulatory issues
will be thrown up. Besides, clients will have to be aware
of the fees they are paying to the seller even though it may
be embedded in the structure itself. Eventually a structured
product also includes a call on the market and if only the
capital is protected at the end of the product tenure, then
there is a clear opportunity loss in terms of deploying the
money elsewhere to get xed returns e.g. in banks. Also,
the inability to cash out in between effectively means that
your money is locked in and exit options can be expensive.
India has seen some interest in gold-based structured
products and though reliable data is not available, it is a
market which will grow exponentially at rst and then
maintain steady growth. But investors are quickly latching
on because it provides a combination of exposure to gold
uctuation, yield and principal protection and has received
good reviews from existing users.
A few years ago, ETFs and stocks of
mining companies were identied
by smart investors as vehicles to
participate in the gold boom. Today
structured products are in favour
because they are widely seen to
compare favourably with other
investment vehicles in gold. As
more investors participate in this
market, it is evident that we are
looking at continued growth at least
for the next several years and are likely to exceed double-
digit percentage of total retail investment demand in gold
within a short period. In times of volatility, structures which
provide capital protection address a widely felt market
need. And the lure of a product which can potentially give
high returns with minimal risk is undeniable. Investors will
actively look to participate in this new investment option
and likely to go with companies which are more transparent
on the investment pattern and have the credibility and
balance sheet to provide capital protection as promised.
August.indd 33 8/9/2011 4:34:32 PM
August.indd 34 8/9/2011 4:34:32 PM
Bullion Market In
South India
N
othing fascinates a South Indian woman more
than gold. No function- religious, family or
social would be complete without the dazzle of
gold. Marriages would demand generous gifting of gold
to the bride, betting the status of the family in the society.
In olden times, when banks were yet to reach semi-urban
and rural areas, gold alone provided liquidity. Even today,
when banks are everywhere, people nd it easier to access
cash through gold than banks. What has added to the love
of gold in recent times is the galloping ination. With
the rise in incomes of the middle and upper middle class
families, consumption of gold in the country and South
India in particular has shown a steady growth in the past
decade. The investment option which attracted mainly
the rich rural populace in the past has invaded the urban
population with surplus incomes, thanks to lower interest
rates on bank deposits and uncontrolled ination.
Gold Market Of South India:
The South Indian market for gold is said to account for about
45% of the countrys total consumption of about 900 tons
annually. Besides the State capitals Chennai, Bangaluru,
Hyderabad and Trivandrum, the tier II cities in the southern
states have also been emerging growth centres. Notable
among them are Coimbatore and Madurai in Tamil Nadu;
Trichur, Ernakulam and Kozhikode in Kerala; Hubli,
Mangalore and Belgaum in Karnataka and Vijayawada and
Visakhapatnam in Andhra Pradesh. With improvement in
infrastructure like communication and banking, bullion
traders have increased in number. Another pointer is the
growing number of non-hereditary entrants in the jewellery
trade. According to informal estimates, these centres have
been seeing an annual growth rate of about 10% steadily.
Falling rates of interest on bank deposits, rising ination
and unprecedented annual increase in gold price from 2001
have pedaled the growth in the volumes of investments in
gold, pulling down the demand for jewellery. Jewellery
accounted for more than 90% of the demand a decade ago.
Today, this has dropped to less than 70% in many places.
Investment in bars and medallions has risen to 30% of the
total demand. State-wise breakup of annual consumption is:
With the rise in incomes of the middle and
upper middle class families, consumption
of gold in the country and South India in
particular has shown a steady growth in the
past decade.
S. Guruswamy,
Director (Marketing)
Surana Corporation Limited, Chennai
August.indd 35 8/9/2011 4:34:33 PM
Tamil Nadu - 180 tons
Kerala - 60 tons
Karnataka - 70 tons
Andhra Pradesh - 95 tons
Here is an overview of the southern states individually:
Tamil Nadu:
The state of Tamil Nadu accounts for about 20% of the
countrys gold demand or about 180 tons. The largest
centre for gold and jewellery is the state capital, Chennai.
In fact, Chennai is the largest centre in South India. The
city consumes about 120 tons per annum. Other major
centres are Coimbatore and Madurai, accounting for about
30 tons each annually. Jewellery continues to hold its
sway, but, the unprecedented spurt in gold prices in the last
few years is undoubtedly
tempting investment in
gold bars and medallions.
The style, size and shape
of jewellery showrooms
in the city have changed
dramatically. The cramped
dingy showrooms of the past
are disappearing giving way
to swanky multi-level outlets
with soothing ambience.
Many large format retail
outlets have sprung up
with stunning interiors.
Jewellery catalogues have
gone electronic. The
retailers pay more attention
now than ever to quality
and nish. The customers
are aware of the means to ensure quality. Thus, most of the
showrooms display the sign BIS Approved Showroom.
With the country slowly moving towards mandatory
assaying and hallmarking, the retailers are equipping
themselves to meet the expected standards of quality. Most
of the big retail showrooms also offer online shopping.
But online shopping of jewellery is yet to take off.
The tier-II cities Madurai and Coimbatore have seen
remarkable growth in retail space, coupled with a large
presence of bullion dealers, in the recent past. Many large
showrooms have sprung up in the recent past. Coimbatore
is the most preferred place for many big retailers in Kerala
for expansion. Presence of a very large and rich clientele
in Coimbatore apart, the forbidding 4% vat on jewellery
in Kerala is said to be the key reason for more and more
Kerala based retailers opening shop in Coimbatore.
Karnataka:
The southern state of Karnataka accounts for about 70 tons
of gold consumption per year. The state capital, Bengaluru,
is the biggest centre for bullion trading as well as jewellery.
While Bengaluru alone
would account for about
50 tons, the other tier-II
cities like Hubli, Belgaum,
Karwar and Mangalore
together would consume
about 20 tons.
Bengaluru has always been
cool to gold and jewellery.
But, especially, when bank
interest rates started falling
in the past, people who had
a dislike for stock market
turned to gold. The surplus
incomes of the ever increasing
middle class, though too
small for investment in real
estate, are good enough for
gold. It is estimated that forty
percent of the consumption goes into investment in gold
bars and medallions. But, of late, with the entry of branded
jewellery offering chic designs for daily and ofce wear,
the middle and upper middle class women in the cities
have started spending on them.

Falling rates of interest on bank deposits,
rising ination and unprecedented annual
increase in gold price from 2001 have
pedalled the growth in the volumes of
investments in gold, pulling down the demand
for jewellery.
August.indd 36 8/9/2011 4:34:33 PM
The tier-II cities like Hubli, Belgaum, Karwar and
Mangalore draw their bullion supplies from Bengaluru
and feed jewellery
not only to the local
showrooms but also
those in Bengaluru
and neighboring
states.
Kerala:
Keralas tradition
is steeped in great
love for gold. The
recent ndings of
enormous volumes
of gold articles in the
cellars of Sree Padmanabhaswamy Temple in Trivandrum
should be proof enough. It is estimated that the State of
Kerala consumes 60 tons of gold annually. Major chunk
goes into ornaments. About 20% of the consumption
is in gold bars and medallions. Like anywhere else, in
Kerala too, people today look to gold for investment to beat
ination. Another major factor is said to be saving for the
future of the children as well as family. Here, gold seems
to have edged out options like bank deposits and equity
market. A sizeable volume of gold ows into the State
through the NRIs in the gulf. It is well known that some
of the leading jewellery retail chains in the gulf, especially
Dubai, have been set up by NRIs from Kerala. All of them
have their jewellery showrooms in
Kerala as well, in Kochi, Trivandrum,
Kozhikode and Trichur.
The main source for gold is imports
through nominated agencies
and personal carriage by NRIs.
Trivandrum and Kochi are the airports
of entry. Gold ows from these two
airports to other major bullion centres
like Kottayam, Kozhikode and Trichur. The largest
jewellery making hub in Kerala is Trichur, which accounts
for about 20 tons of gold per annum. While marriages pick
up the traditional designs, the daily wear is in appealing
contemporary price friendly designs.
Kerala is the rst
state in the country
to tap the gold loan
market in a big
way. The Kerala
based Non-Banking
Finance Companies
are quite popular
across the country.
They offer the
highest amount of
loan per gram of
gold and also keep
the interest rate
competitive. Not only that, they also offer interest rates
far above those offered by banks on the deposits they take
from the public. No wonder, their volumes are leaping.
The Reserve Bank of India has recently come very hard
on lending on gold. But the NBFCs need not worry if they
are able to attract enough cash deposits from the public to
handle their gold loans. The hidden but a very welcome
complement of the gold loans is that an idle asset is brought
into the economy. Another thirst is the annual month-long
shopping festival in Kochi, Trivandrum and all other major
cities. This is a replica of the annual Dubai Shopping
Festival.
Andhra Pradesh:
Andhra Pradesh accounts for about 95
tons of gold consumption annually.
While the state capital Hyderabad is
the biggest bullion trading centre, there
are other major centres at Vijayawada
and Visakhapatnam. These three
centres together feed the rest of the
smaller centres in the state. Investment
in gold as an asset class has all along been prevalent in the
Most of the showrooms display the
sign BIS Approved Showroom.
With the country slowly moving
towards mandatory assaying and
hallmarking, the retailers are
equipping themselves to meet the
expected standards of quality.
Contd on page no 40
August.indd 37 8/9/2011 4:34:34 PM
August.indd 38 8/9/2011 4:34:34 PM
August.indd 39 8/9/2011 4:34:34 PM
state, especially among the agricultural gentry. Side-by-
side, there exists a passion for jewellery to meet demands of
dowry in marriages. While the urbanites choose jewellery of
daily wear in exquisite designs and go for a little investment
with their surplus incomes, the rural sector with rich farmers
buys huge amounts of traditional jewellery and also spends
large amounts on gold investment. With increase in demand,
number of jewellery retailers and bullion traders has increased
manifold. A special characteristic of Andhra Pradesh in gold
consumption is its preference for 100 gm bars, while the rest
of the country opts for kilo bars.
Like other cities, the twin cities of Hyderabad and
Secunderabad have seen, in the recent past, remarkable
expansion of retail space. Leading brands have opened shop.
Hyderabad is famous for jewellery studded with coloured
stones and pearls. Clusters of jewellery manufacturing plants
are operating in other smaller cities/towns viz., Vijayawada,
Visakhapatnam, Rajahmundry,
Kakinada, Nellore, Poddutur and
Kurnool. These centres draw
their requirement of gold from
Hyderabad, Visakhapatnam and
Vijayawada.
SILVER:
South India accounts for about
1300 tons of annual consumption. The countrys annual
consumption is 3500 tons. While about 200 to 300 tons
would come from the recycled market, a very small
proportion also comes from the copper reneries as by-
product. The rest is imported. The biggest Silver trading
centre in the south is Chennai, with a share of 800 tons
a year. While Andhra Pradesh comes next with 300 tons,
Karnataka would consume 200 tons per annum. Silver use
in Kerala is said to be negligible. The tier-II cities in the
south which have emerged major trading centres are Salem
in Tamil Nadu, Vijayawada and Visakhapatnam in Andhra
Pradesh and Bellary in Karnataka. Industrial application
and utensil manufacture are the two major segments of
consumption. But, recently, in the last one year, investment
in silver has grown phenomenally, riding on the back of
unprecedented price rise. But this trend vanished as fast as
its appearance, with the roller coaster tendency of the silver
price. Some investors reaped unexpected returns and many
others went broke unable to square their positions.
Overview of The South Indian Market:
Corporate Entry: There are quite a few jewellers and
bullion dealers in the corporate sector. The transformation
from proprietorship and partnership to corporate entity
began in the last decade. The key reasons for the change
are resource crunch for expansion and the reluctance of
the banks to adequately fund such expansions. Most of
these corporate entities are listed companies with annual
business volumes in excess of Rs.5000 crores. With
corporate governance, these companies have brought
transparency and quality into their operations, building up
customer condence. Quite a few large jewellery rms are
in the process of entering the corporate sector. With more
and more embracing the corporate entity structure, one
can hope, before long, jewellery and bullion trade would
emerge as a strong industry with its own voice.
Branding and QualityStandards:
Branding of jewellery is catching
up with the consumers. The last
decade has seen the launch of many
brands in the South. With branding
comes not only an identity to the
retailer but also quality assurance
to the consumer. Competition between jewellery brands
is not as erce as other consumer goods. This is because
of the enormously limitless range of designs and the after
sales service. The scope of growth for all the brands is very
bright.
Electronic Trading and Automation: With the
advancement of technology in the last decade, almost all
i ll h i l l id b
It is the fond hope of everyone that
introduction of GST in the country
would remove all tax/duty barriers
and offer a borderless trading region
across the whole country.
August.indd 40 8/9/2011 4:34:35 PM
traders and jewellery retailers in the South (as in the
country) use cutting edge softwares for maintaining
their accounts, networking of their branches and other
allied activities. Some of the bullion traders offer over-
the-counter (OTC) electronic platform for trading. Most
of the jewellery retailers have installed online shopping
facilities for the customers. A number of bullion dealers
and jewellers extensively use the Multi Commodity
Exchange (MCX) for price hedge. While some welcome
MCX as a boon for hedging their price risk, some others
blame the speculative trading on the MCX for the price
uctuation in the physical market. This is however
debatable.
Tax and Infrastructure Barriers: The bullion trade
continues to be regional even after introduction of VAT
in the country. The tax rates are not uniform across the
country. Kerala has a VAT of 4% on gold jewellery,
Karnataka 2% while most other States follow 1%. There
are state specic levies like octroi and other duties. The
bullion traders and jewellers would need to have separate
VAT registrations in every state. Even then, they would
not be able to enjoy input tax credit for VAT paid in other
states. Thus, effectively, they have to operate within the
borders of their own states. This acts as a formidable
barrier to operations at national level. It is the fond hope
of everyone that introduction of GST in the country
would remove all tax/duty barriers and offer a borderless
trading region across the whole country.
Promotional Efforts: The concept of jewellery
exhibitions has come to stay in all major cities of the south.
They are so popular that more and more international
participants eagerly wait for such shows. They are also
appropriately named International Jewellery Shows.
Some cities have them twice a year. Some of these are
B2C and some B2B. Whatever the nature, the general
public and the jewellery traders give them a great
thumbsup. While the consumers are happy to buy from a
very wide range of designs, national and international, at
competitive prices, the wholesalers and retailers endorse
that they are able to clock very high volumes and also
widen their respective clientele at the same time. As
these shows bring on display the latest machinery and
tools for jewellery making from international rms, the
local participants get an easy opportunity for upgrading
their technology without travelling abroad.
August.indd 41 8/9/2011 4:34:35 PM
August.indd 42 8/9/2011 4:34:39 PM
Id Cins / SiIver Lagdis
Jagawat Sns:
Dealer of Nakoda Bullion Gold Bars
Coins and Silver Bars / Coins / Notes
Tel - (022) - 23418631 / (022) - 22443234
Fr SiIver Bars, cntact
022 22403233, 23418810
Email: lalitjagawat@hotmail.com
Website: www.nakodabullion.com
August.indd 43 8/9/2011 4:34:40 PM
August.indd 44 8/9/2011 4:34:42 PM
August.indd 45 8/9/2011 4:34:44 PM
Established in the year 1997, Khemka Group of
Companies has been amongst the market leaders
in providing wholesale and retail level bullion
delivery in the spot, forward and future markets
in India. Khemka Group of Companies is the
biggest importer of bullion in North India and
one of the top bullion importers in the country.
Mayank Khemka is the Managing Director of
Khemka Group of Companies.
Bullion Market In
North India
W
hat is total import gure of gold in north
India?
I dont have the exact gure. But it is
approximately 25-30% of total import in India. India
imported around 900 tons last year and that transforms
around 225 to 275 tons in north India.
Imports in north India is basically for consumption in north
India only. In north India there are two types of demands -
jewellery and investment.
What is the nature of investment?
North Indians buy gold bars as investment. They buy 1
kg bar for that purpose. Jewelry does not come as mode
of investment. There is also demand for silver bars for
investment, but investors are more inclined to gold bars.
Silver bars are too bulky to carry, so investors prefer gold
1kg bars for investment.
June and July months are traditionally lean season in
South India. Is that it true also with north India?
Yes, that is also true in north India. June and July is the
sowing season and agriculture community in north India
does not have much cash to deploy on investment, they put
all their money in agriculture.
In north India what are the important bullion centres?
In north India Delhi is the biggest market. It covers around
55% of the total bullion sales. Around 25% will be Jaipur
and in the remaining 25% are many small centers like Agra,
Kanpur, Lucknow etc.
Apart from direct bullion investment, investors are
even interested to invest in products like gold ETFs,
gold funds?
ETF is not so popular in north India because it is not so
transparent. The increase in price of gold ETF is not fully
transferred to gold value. Moreover they like physical feel
of gold, hence ETFs are not very popular in north India.
Do Investors buy gold directly from bank or bullion
importers?
They prefer to buy gold from bullion importers as they buy
August.indd 46 8/9/2011 4:34:45 PM
in small quantities and its random purchases and they also
need an option to sell the gold which only the importers
can buy.
During Akshya Tritiya there was media report that
banks sold lot of gold during that time in south India. Is
that true in north India?
See what happens with banks they are just bullion points.
In north India MMTC is well popular in the same category
of bullion points. They sell quite amount of gold through
these points.
In north India what investors prefer - coins or bars?
It depends upon investors prole. If the investment amount
is small, then they go for gold coins as coins are available
in small denominations. But if the investment amount is
high like 20 to 50 lakhs, then they go for bullion bars. So
we have both sections of investors small as well as large
investors.
How is the competition in bullion trading in north
India?
There are lot of bullion traders in north India and so
competition is very high. Also in north India, there is
tradition of dealing in cash. What is practice in south India
traders prefer transaction more on cheque. But traditionally
customers here prefer cash dealings. So it is very difcult
market to operate.
In jewelry sector what kind of growth you are seeing at
this point of time in north India?
The growth was pretty strong last year and it is expected
to remain rm this year too compared with 2008 and 2009.
Last year bullion imports touched more than 900 tons
from 700 tons previous year. So this is pretty 25 to 30%
growth and jewellery segment contributed good portion
into this growth. In 2008 and 2009, there was recession and
investors did not have surplus money to invest. But now
stock market is doing well, economy is growing, real estate
and other sectors are performing, so people have money to
spend on luxury items like jewellery.
Do you think this growth will remain or there will be
some slowdown in coming future?
Growth is expected to remain rm, but all depends upon
prices. If the prices do not shoot up too much, we expect
growth to remain intact.
RBI is hiking the interest rate aggressively. Do you
think it would have negative impact on bullion industry
as well?
There are some concerns, but I dont think rate hike would
have any strong impact on bullion market. Yes, what can
create difference is the attractive deposit rate. All banks
are offering attractive rate of interest in xed deposits.
But investors nowadays basically invest through portfolio
allocations. They divide their portfolio in segments like
xed deposits, real estate, stock, bullion and so on. I think
15 to 20 percent of portfolio allocation will go to bullion
investment.
What bullion industry expects from government in
policy reforms?
Government in its budget to promote gold and silver
rening in India had allowed import of gold dore bars at
concessional rate of duty. But the policy is still not clear
as to whether reners can directly import dore bars or it
has to be done through nominated agencies. We have made
many representations to the government and urgent action
is needed from the government to clear the uncertainty
regarding this.
Policy reform in silver is also awaited allowing silver
forwards and silver loans to jewellers like it happens in
gold. Similary silver ETFs should also be allowed.
August.indd 47 8/9/2011 4:34:45 PM
August.indd 48 8/9/2011 4:34:46 PM
Global Scrap
Supply
and its
Importance:
An Overview
Jeffrey Rhodes
Global Head of Precious Metals &
CEO INTL Commodities DMCC
What exactly is scrap gold? as it can mean different

things to different people in different parts of the
world and this brief article will follow the same
format. I spoke to my good friends at GFMS, considered
by many to be the worlds leading gold research house, and
they regard all gold supply, that doesnt come directly from
gold mines, to be scrap. Other denitions gleaned from the
websites of scrap gold merchants state that:
Scrap gold includes any piece of metal that is entirely or
partly gold. Some common items sold as scrap gold include
broken gold jewellery, gold coins, gold dental bridges, gold
wire and gold shot
Or
The term "scrap gold" usually refers to karat gold
jewellery that is at least 10K that is broken, damaged, or out
of fashion and no longer worn. Typically includes chains,
earrings, bracelets, anklets, charms, rings, watches, money
clips, lockets... any item made out of gold.
And
Scrap Gold is the term used for the process of recycling
broken jewellery, coins and other items that are no longer
wanted
Scrap Supply East Versus West
Tonnes 2000 2005 2009 2010
2010 v
2000
2010 v
2000
EAST
East Asia 143.0 207.8 447.7 443.2 210% -1%
Middle East 202.5 325.3 487.6 369.3 82% -24%
Indian Sub-Continent 102.1 129.9 176.9 137.7 35% -22%
Total 447.6 663.0 1,112.2 950.2 112% -15%
WEST
Europe 62.2 99.8 269.2 338.6 444% 26%
North America 58.1 65.4 133.2 154.1 165% 16%
Latin America 20.0 31.2 101.5 123.2 516% 21%
Africa 12.3 17.7 41.1 43.9 257% 7%
CIS 17.2 23.5 35.3 32.8 91% -7%
Oceania 2.2 1.9 2.2 2.7 23% 23%
Total 172.0 239.5 582.5 695.3 304% 19%
Source: GFMS Gold Survey 2011
August.indd 49 8/9/2011 4:34:47 PM
The Eastern markets as a geographic bloc accounted for 950
tons of secondary gold supply last year representing a gain
of 112% over the year 2000 with East Asia geographically
the most important region for scrap ows, followed the
Middle East, which includes Turkey, with the Indian sub-
Continent also quite signicant.
The West has shown signicant growth of 304% in total
since 2000 with 695 tons in 2010 with Europe, led by the
UK, recording growth of 44% to reach 339 tons, with
North America coming in with 154 tons (a gain of 165%),
while Latin America rose by over 516% to 123 tons.
Now lets take a more detailed look at each of the geographic
regions.
Scrap Supply Europe & The Americas
Tonnes 2000 2005 2009 2010 2010 v 2000 2010 v 2009
United States 53.6 60.4 124.0 143.0 167% 15%
Italy 24.6 46.7 78.0 98.0 298% 26%
UK & Ireland 3.7 4.5 59.4 69.8 1786% 18%
Mexico 3.8 7.2 50.3 58.0 1426% 15%
Germany 4.9 7.6 32.4 44.1 800% 36%
Spain 2.5 3.7 20.1 31.9 1176% 59%
France 5.9 12.1 24.9 29.7 403% 19%
The United States became the largest scrap gold market
in the world in 2010 with secondary supply of 143 tons,
which was 167% more than at the turn of the century with
Italy the second most important market in the West and the
biggest in Europe with 98 tons.
However the UK and Ireland with almost 70 tons is coming
up fast on the rails with scrap ows exploding in the last
ve years, a point that I will consider in a bit more detail
later in this paper, while Germany, France and Spain have
also posted large gains since 2005.
Mexico has been the key driver of the growth in scrap ows
in Latin America between 2000 and 2010, ranking only
second behind the UK in percentage growth terms.
Scrap Supply The Middle East & India
Tonnes 2000 2005 2009 2010 2010 v 2000 2010 v 2009
Turkey 56.0 67.7 217.2 122.0 118% -44%
India 79.0 94.0 115.5 81.0 3% -30%
Egypt 34.0 72.7 65.0 48.0 41% -26%
Saudi Arabia
& Yemen
60.8 92.5 57.3 43.1 -29% -25%
Pakistan 20.0 30.9 53.9 49.8 149% -8%
Iraq & Syria 3.5 14.4 35.6 36.4 940% 2%
Iran 11.0 16.1 32.2 32.7 197% 2%
United Arab
Emirates
10.6 28.2 27.1 26.8 153% -1%
Looking at the Middle East and Indian sub-Continent, it is
clear that Turkey is today the most important source of scrap
gold supply in the emerging markets of The East with 122 tons
in 2010, up by 118% from the levels posted in 2000, although
this was sharply lower than the 217 tons reached in 2009.
Scrap Supply East Asia
Tonnes 2000 2005 2009 2010 2010 v 2000 2010 v 2009
China 24.0 41.7 102.8 138.2 476% 34%
Indonesia 36.0 67.0 79.9 64.9 80% -19%
Thailand 13.5 12.4 66.0 44.7 231% -32%
Vietnam 6.0 7.8 51.5 64.8 980% 26%
Japan 13.5 24.5 35.3 44.1 227% 25%
Taiwan 10.8 13.0 30.1 27.5 155% -9%
Malaysia 4.7 11.0 19.3 22.2 372% 15%
Korea 11.8 17.5 21.3 18.0 53% -15%
Turning to East Asia, it is surely not a great surprise to see
China as the leading source of secondary gold supply with
138 tons followed by Indonesia, Thailand and Vietnam,
with the latter rising by 980% since the year 2000.
Scrap Supply Top 10 Ranked By Volume
Tonnes 2000 2005 2009 2010 2010 v 2000 2010 v 2009
United States 53.6 60.4 124.0 143.0 167% 15%
China 24.0 41.7 102.8 138.2 476% 34%
Turkey 56.0 67.7 217.2 122.0 118% -44%
Italy 24.6 46.7 78.0 98.0 298% 26%
India 79.0 94.0 115.5 81.0 3% -30%
UK & Ireland 3.7 4.5 59.4 69.8 1786% 18%
Indonesia 36.0 67.0 79.9 64.9 80% -19%
Vietnam 6.0 7.8 51.5 64.8 980% 26%
Mexico 3.8 7.2 50.3 58.0 1426% 15%
Pakistan 20.0 30.9 53.9 49.8 149% -8%
Contd on page no 52
August.indd 50 8/9/2011 4:34:47 PM
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August.indd 51 8/9/2011 4:34:49 PM
As you can see the United States rose to number one spot with
143 tons in 2010, closely followed by China with 138 tons
while Turkey fell from the top spot in 2009 to 3rd last year.
Now if we take a look at global gold scrap ows in terms of
percentage changes, over since the new millennium began
you can see that by far the fastest growing market in the
world is the UK & Ireland which has risen by a staggering
1786% from 2000 to 2010 with most of that increase
occurring over the last ve years. Mexico is one of the other
big stories with its market, changing from a regional gold
jewellery fabrication centre to a major hub for scrap gold
ows in Latin America. It has recorded the second biggest
growth in percentage terms over the last eleven years rising
by 1426% to over 58 tons in 2010. Flows from Spain have
grown by 704%. Vietnam by 980% and Iraq & Syria have
grown by 940%. These are truly staggering results and
perhaps should serve as a warning to the gold bulls that
secondary supplies can be mobilized from sources around
the world if the price is right and economic conditions
remain challenging.
Key Drivers of Scrap Flows
2000 2005 2009 2010
2010 v
2000
2010 v
2009
Average Gold
Price USD/oz
$279.11 $444.45 $972.35 $1,224.52 339% 26%
Average Gold
Price Euro/kg
9,734 11,521 22,512 29,739 206% 32%
Average Gold
Price Yen/g
967 1,577 2,920 3,444 256% 18%
Average Gold
Price Yuan/g
74.29 117.09 213.87 266.15 258% 24%
Average Gold
Price Rs/10g
Rs4,518 Rs6,454 Rs15,233 Rs18,304 305% 20%
And now to perhaps the most important section this article,
what are the key drivers of secondary gold scrap supplies
in todays global markets?
Obviously, and as with all nancial and commodity
markets, the key focus for everyone has been, and will
be, for the foreseeable the future outlook for the global
economy in general, and the US in particular. Shrinking
disposable incomes and concerns over job security in the
developed markets in the US and Europe not only inhibits
new jewellery demand but also is a key factor in selling old
or unwanted gold for much needed cash. This combined
with gold prices reaching all time records highs, not just in
dollars but also in a range of local currencies, has also been
an important factor in the rapid growth of scrap gold ows
over the last few years.
However looking ahead it is actually price expectations that
hold the key for potential scrap gold sellers, certainly at a
wholesale level. For example looking at India, despite a 20%
increase in the Rupee price of gold in 2010 scrap sales in the
worlds largest physical gold offtake market actually fell by
30% last year as local traders anticipated, and still anticipate
much higher dollar and rupee gold prices. This is a key
point and one that I will return to in my closing comments.
Finally, the global physical gold market is one of the last
bastions of real physical arbitrage left in a world dominated
by paper nancial markets. This arbitrage can be driven by
a wide combination of factors that could include regional
rules and regulations; import and export tariffs and quotas;
volatile local exchange rates and interest rates; regional
rates of ination and capital ows that might lead to
Governments acting to stop protect their economies. In
recent years we have seen this type of arbitrage occurring
in places such as Turkey and Vietnam, with the former
being particularly ckle and where the market can change
from being a source of scrap supply to good offtake back to
a supply market within a short period of time.
Scrap Supply versus Primary Production
August.indd 52 8/9/2011 4:34:49 PM
Since the start of the new millennium, the nominal gold price
in USD terms has risen from an average of $279 in 2000
to $1,224 in 2010, a gain of 339%. Gold has also posted
impressive gains in local currency terms in the major gold
producing countries with averages prices rising by 258% in
China, 362% in South Africa and 177% in Australia.
Despite this impressive growth in the value of gold across the
world primary gold production has increased by just 3% from
2,620 tons in 2000 to 2,689 tons last year. This highlights the
complete inelasticity of the gold mining sector to the record
advance in the gold price in all currencies and even if the
current historic price does prompt a new wave of exploration
the time to market for new primary gold supply will be
measured in years not months. With hedging no longer an
acceptable practice the inuence of gold mine supply on the
gold price has become nominal at best.
Now compare the way scrap gold ows have risen over the
same time period with secondary supplies rising from 620 tons
in 2000 to 1645 tons in 2010, representing a gain of 165%.
This elasticity of supply from the scrap gold sector and the
ability of scrap gold merchants to adapt to changing markets
conditions is crucial and a key factor in todays market.
Conclusions
Despite the unprecedented growth in the value of the
yellow metal in all currencies since 2000 the gold producer
community has been completely unable to react and take
advantage this extra-ordinary rally with primary gold
production barely showing any increase, amazing really and
perhaps this explains why share values of the major gold
mining companies have not kept pace with the rising gold
price. Surely this inability to increase gold production to
meet the surge in investment ows into the yellow metal has
been one of the key factors behind golds meteoric rise over
the last ve years.
Also the H (hedging) word is rmly persona non grata in
polite producer circles even if prot margins over production
costs are now at a level not even the most optimistic treasurer
could have hoped for back at the start of the millennium.
On top of this Central Banks, for so long sellers into any
major rallies (or in the case of Gordon Brown dumping the
UKs gold into weakness), now seem to have stepped aside
despite the IMF sales program and in 2010 the Ofcial Sector
became a net buyer for the rst time since the 1970s.
With primary gold production shown to be completely
inelastic, hedging non-existent and the Ofcial Sector no
longer a source of metal, scrap gold supply is now clearly the
only credible counter to the seemingly never ending waves
of investment buying. And even scrap ows have waned
last year despite further impressive gains in the gold price
over 2009 as bullish sentiment has intensied amid growing
economic uncertainty and a lack of condence in the major
currencies.
Despite all the fundamental and technical analysis in the
world when it comes down to it the only real reason to buy
gold, which is a very low yielding asset, was because you
believed that the price would be higher later in the day, or
tomorrow, or next week, or next month, or next year! Clearly
this is the prevailing sentiment behind the current stampede
into gold as a safe haven and speculative fund buying in
futures markets, and it is this psychology that could inhibit
potential scrap gold sellers.
However remember that potentially there is a lot of scrap
gold that could enter the market. According to GFMS there
is 165,000 tons of above ground stocks in the world, with
55% or 90,000 tons held in the form of gold jewellery. Even
if just 10% of this relatively price elastic source of supply
were mobilized it would be over four times greater than total
current ETF holdings and more than the total amount of gold
held by the US.
As I have said the same motivation behind the record level
of investment fund buying of gold applies equally to the
scrap market causing traders to move to the sidelines, i.e.
they everyone expects the gold price to move higher, or in
the case of the Armageddon Brigade that gold as an asset
class will lose less than paper nancial assets. However once
sentiment changes, as it surely will one day because trees
dont grow to heaven, we could see a perfect storm of selling
as investment fund managers and scrap gold merchants hit
their sell buttons at the same time. You really do not want to
be in the way of the resulting Tsunami of gold sales when it
hits the market.
Could this happen? Yes in my view. When could this happen?
Impossible to tell and we may have to wait for longer than
anyone expects but the rst signal will be when the FED acts
to reverse its easy money policy and raise real interest rates.
August.indd 53 8/9/2011 4:34:50 PM
August.indd 54 8/9/2011 4:34:51 PM
Its Gold that
Shines!
Chirag Mehta
Fund Manager Quantum Gold Fund ETF
and Quantum Gold Savings Fund
W
hether its a wedding, a festival or any
auspicious beginning, no celebration is ever
complete without the purchase of Gold.
This yellow metal has always been viewed as a symbol of
success, afuence and authority. Especially in India, gold
plays an important role in cultural and religious events.
For instance, during festivals such as Diwali, gold coins
imprinted with the image of Goddess Laxmi are gifted
to loved ones as a token of luck. Gold, as a symbol of
status, is even mentioned in the epics the Ramayana
and the Mahabharata. Throughout history, it was gold that
represented the splendour and status of the kings and their
empires.
Owing to its prominence in our culture, gold is considered
a must-have by Indians. Every family has its own little
hoard of jewellery, coins and souvenirs all
handed down from one generation to the other
with their respective stories and sagas.
So, yes, Indians are partial to gold. We love
the yellow metal and will buy it even though
prices continue to rise. To us, gold is more than
an alloy and owning it is beyond just adding to
our treasure chests - it is the realization of our
aspirations and an assurance that the future of
our loved ones will be secure.
And hence, it is not surprising that India
recorded the highest purchases of gold in history
last year. Yes, the Indian gold market is evolving, but it
still needs to be organized. Today, each gold outlet offers
customers a price suited to their prot margins No Price
Standardization! Lower the denomination, more expensive
it gets Not suited for smaller customer pockets! The
Bureau of Indian Standards surveys still raise concerns on
purity Is your Gold Pure? Increasing cases of Gold theft;
even from bank lockers Safes are Unsafe!
Almost as an answer to these problems, Gold Exchange
Traded Funds (ETFs) were launched in India in 2007. Gold
ETFs offer a convenient platform to tap into the safe haven
asset. But of course, investors still wonder: Are ETFs safe?
Do these funds invest in real gold? Are they cost effective?
Heres the logic behind gold ETFs and why your investment
in ETFs is really as good as gold.
August.indd 55 8/9/2011 4:34:54 PM
Gold ETF- As Good as Gold
Gold ETFs are probably one of the best nancial
innovations. A Gold ETF is a simple product that passes on
the efciency of a wholesale market to a retail investor.
By investing in Gold ETFs, retail investors are able to
buy small amounts of gold at prices which almost match
those at which hundreds of tonnes of gold are transacted
between a producer/rener and a bullion bank or any other
big institutional investor. Theres high transparency and
standardization in the pricing system. The gold is stored
in secure vaults and is completely insured (a fact that I can
assure you of with regards to the Quantum Gold ETF).
Investors can buy and sell their
Gold ETF units on the National
Stock Exchange without worrying
about the physical delivery of gold.
Hence, concerns about purity and
safe keeping of the gold are taken
care of right away.
Gold ETFs give you a convenient,
hassle-free, tax efcient and above
all, secure means to own gold.
However, even though the medium
was brilliant, Gold ETFs mandated
the ownership of a demat account to invest in them.
Unfortunately, that caused a large set of investors to be left
out. All those without a demat account were not able to
make most of this efcient form of buying gold.
But, the investor is king! And so, for the benet of those
without a demat account, an extension of Gold ETFs was
brought in to play the Gold Fund of Funds.
The Extension to ETFs
Gold Fund of Funds predominantly invests in Gold ETFs
and endeavors to track gold prices (just like Gold ETFs).
Through Gold ETFs investors could invest in denominations
as low as half gram; Gold Fund of Funds further increased
affordability by lowering the investment threshold to Rs.
500 at a time.
Gold Fund of Funds also brought with them the added
benet of Systematic Investment Plans (SIP) which is an
investment option that allows you to set aside money in
regular installments, instead of investing one big lump sum
amount. SIPs are ideal for those with modest salaries, long
term goals, and in want of nancial discipline. Say you
decide to accumulate gold for your daughters marriage. You
would need to ensure that your allocation to gold follows a
disciplined calendar. However, you might sometimes face
challenges on this path. For instance, someone may intrude
your systematic purchase with
their ingenious opinion on prices,
resulting in you missing your
round of allocation. Chances are
that you could end up buying at
higher rates or even miss out on
your gold accumulation plan.
This is the very challenge that
Gold Fund of Funds helps you
address through their SIP facility.
You can instruct your fund house
to regularly allocate a xed
amount (say Rs 500) to gold at a
particular date (say 15th of every
month) for a particular period (say 5 years). Using the SIP
facility, you can invest little by little regularly, which will
go a long way in creating a sizeable corpus of gold over
time. The SIP facility offers you the best of both worlds
allows you to compound your investments and also helps
you average out your buying costs.
Gold Fund of Funds are tax efcient as well when compared
to investments in conventional physical gold. The long
term capital gains creep in just after one year as opposed to
three years for physical gold. Also, they do not attract any
wealth tax as physical gold investments do for every year
that you own gold.
Investors can buy and sell their
Gold ETF units on the National
Stock Exchange without
worrying about the physical
delivery of gold. Hence,
concerns about purity and safe
keeping of the gold are taken
care of right away.
August.indd 56 8/9/2011 4:34:54 PM
There aint such thing as a free lunch, all this convenience
comes at an extra marginal cost. Take for instance the
Quantum Gold Savings Fund. Here you would be paying
0.25 % p.a. as expenses, over and above the prevailing
charge of 1% p.a. for Gold ETF. Thus, all in all you would
have to pay an expense ratio of 1.25% p.a. But before you
start considering this cost in isolation, do take a look at the
heavy premiums that you would have to pay if you buy
physical gold. The difference between the two is quite an
eye opener. If you compound the premiums you pay for
physical gold over the years, you will end up with a huge
gure. The 1% p.a. expense ratio charged for Gold ETFs
goes towards safe keeping, insurance, audit of the gold
and a part of it also to the fund house as management fees.
Not a bad deal, right? Some would wonder why invest in
a Gold Fund of Funds and pay an extra cost of 0.25% p.a.
over and above the expense of the elementary gold ETF;
wouldnt it be better to just own the gold ETF directly?
This would depend largely on what you, as an investor, are
looking for while investing in gold. For e.g. : an investor
without a demat account or one looking for automated
systematic investment plans would be better suited for the
Fund of Funds. While an investor who is comfortable with
trading on the stock exchanges and is well versed with the
brokerage dynamics would probably prefer to invest in Gold
ETFs directly. Speaking about brokerages, it helps to know
that a retail investor is usually charged a high brokerage,
while an institutional investor like a Fund of Fund would
likely pay a lower brokerage.
The Way forward:
The awareness of ETFs is slowly gaining ground and the
acceptance of this mode of owning gold is increasing by
the day. Still, we dont see much participation from the
bullion industry towards the development of the same.
Going forward, the market would likely force the industry
to accept and complement this efcient form of owning
gold.
There have been some initiatives like offering gold loans
against Gold ETFs, buying jewelry in exchange of gold
ETFs, etc. But, its just a handful of players keen to make the
rst move. Slowly but surely, there would be a unanimous
acceptance of Gold ETFs within the bullion industry as free
markets always strive for efciency.
Tax Gold Fund of Funds Physical Gold
Long Term Capital Gains Tax After 1 year After 3 years
Wealth Tax Not Applicable Applicable for every year of holding
August.indd 57 8/9/2011 4:34:55 PM
August.indd 58 8/9/2011 4:34:56 PM
G
old, silver and other precious
metals are traditionally
considered as safe haven
assets which serve as ight-to-safety for
investors when there is global turbulence
and uncertainty. The advantage of these
assets is that because of their tangible
nature they serve as a ready store of
value and investors are able to readily
identify with them. Of them all, gold is a
commodity that is most easily understood
as it has stood the test of time as a medium
of exchange and a store of value. As an
investment asset gold enjoys a distinct
advantage as it has a weak correlation with
stocks and bonds adding to the breadth of
an investment portfolio.
In the last few months the role of gold as
a safe haven asset has come to the fore
thanks to the global uncertainty caused
by debt problems in the euro zone and
the US. The main problem plaguing the
euro zone for more than a year now has
been that of the Greek debt. Very simply
Global Uncertainty and the
Trajectory of Precious Metals
Tanushree Mazumdar
Senior Economist and Vice President- Knowledge
Management, NCDEX
put the Greek debt problem is nothing but
a case of a country having lived beyond
its means and having to bridge this gap
between income and expenditure through
borrowings which it has to then repay.
This borrowing or debt became a burden
for Greece as it stood at almost 160 per
cent of its GDP!
Why does indebtedness become a
problem? For markets and nancial
institutions the threat of a sovereign credit
rating downgrade by credit rating agencies
is enough to send them into a nervous
frenzy. A downgrade makes it difcult for
business in a country to raise money from
overseas markets and puts a stress on its
banking sector and those of banks in other
countries as they have exposure to this
government debt which could simply end
up being on their books as non-performing
assets thus eating into their capital.
At the time of writing this, debt concerns
in both the US and the euro zone have
This borrowing or
debt became a
burden for Greece
as it stood at
almost 160 per
cent of its GDP!
August.indd 59 8/9/2011 4:34:56 PM
been allayed to an extent as at the 11th
hour lawmakers in the US agreed to cut
its decit by $2.1 trillion and raising the
debt ceiling to enable US to pay its bills
till November 2010. The resolution came
after weeks of political theatre which saw
the Republicans and Democrats engaged
in a bitter struggle to arrive at a consensus
to raise USs debt level (effectively its
ability to borrow) as well as cutting
decit (curtailing expenditure). There was
respite on the euro zone front as well with
the new package in place for Greece. The
new package will mean that Greece will
get additional support of 160 billion (i.e.
over and above the support of 110 billion
that it had received in 2010). How does
all the above affect gold? Through two
channels: currency and investment. The
latest announcement of the Greek rescue
package saw the euro appreciate against
the dollar by close to 2 per cent on a single
day! As most commodities including gold
are denominated in dollar, a stronger euro
(and a weaker dollar) makes commodities
cheaper. An additional factor is at work
in the case of gold: that of a safe-haven
asset. As the uncertainties regarding the
euro zone have not completely dissipated
and the markets have yet to digest the
full import of the debt deal in the US,
perceived riskiness would increase the
appetite for gold investment. This has
been proven with gold crossing the $ 1620
per ounce mark at the time of writing.
What about silver and other precious
metals? Unlike gold, these metals are not
stubborn safe haven investment and are
often subject to unexplained volatility.
Silver, for example, recently has seen a
rally and touching new records. Markets
believe that silver follows gold or more
importantly its ratio to gold in price.
Currently the gold to silver ratio is about
40. The norm in the past several years is
for the gold-silver ratio to hover between
55 and 60 i.e. the price of an ounce of gold
was 55 to 60 greater than the price of an
ounce of silver. The very long-term gold-
silver ratio is said to be around 16.
What would be the outlook for precious
metals in the unfolding global scenario? To
a great extent this would depend on how
the market nally thinks the resolution
of the debt ceiling through spending cuts
(without any plan to raise taxes) will
affect the growth in the US. The Federal
Reserves response too will determine the
market sentiment. If a threat to growth
seems imminent, markets moving to a
risk on mode cannot be ruled out which
could lead increased investment in gold.
If the Fed responds by increasing money
supply (QE 3) to prop up growth then the
quantum of dollar ow would decide the
exchange rate vis--vis other currencies,
especially the euro. And, of course, nally
all will depend on how much the markets
believe in governments and central banks
ability to deliver their countries from the
throes of debt and put them on the path
of sustainable recovery! In markets,
perception is everything!
As the
uncertainties
regarding the
euro zone have
not completely
dissipated and
the markets have
yet to digest the
full import of the
debt deal in the
US, perceived
riskiness would
increase the
appetite for gold
investment.
August.indd 60 8/9/2011 4:34:56 PM
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August.indd 61 8/9/2011 4:34:57 PM
August.indd 62 8/9/2011 4:35:00 PM
August.indd 63 8/9/2011 4:35:01 PM
G
old touched new high last month on global
economic concern. Both US and European
Union economies are struggling, investors are
seeking respite in gold. Here comes the real problem.
As no investment is safe at this point of time and so
investors are buying gold, in Indian market, the extreme
high prices have created less demand in the physical
market. Usually, month of June and July is lean season.
Still, sales hampered all over the country more than as
usual. Only in Hyderabad, demand was said to be usual.
Bullion traders with whom we talked this time are mostly
bullish on gold for rest of the year. They are not seeing
much of downside from the current level. But by the time
we are writing this report, silver had fallen 2 dollar in single
day and all commodities including gold had fallen viciously
in single day. So tough days may be ahead!
Kanpur Market
Mr.Ambrish Agarwal, Director, Radha Mohan Purshotam
Das Jewels Pvt Ltd. explains that, current scenario is quite
unexpected, July sales fell down by more than 80%. At
large, customers perceiving this as a rampant speculation.
Normally, gold imports in Delhi region (Caters Northern
states) will be around 1 tons /per day, but imports in July
declined to 100 kg/day and even below at times. He expects
the gold price to rise above $1700/oz and a long stay at this
range may push the prices to $1800/oz.
Courtesy: Radha Mohan Purshotam Das Jewels Pvt. Ltd
Salem Market
In Salem, Mr.N.Vijay, Proprietor, Vijay bullion, informed
that, Market sentiment is weak and sales in Salem region
are below normal. In last month, Bullion sales in Salem
region were around 450 kg. He explained that, both dollar
and gold values are heading towards north against market
dynamics. If the trend continues, gold prices may touch
newer highs in near short term. He expects gold prices to
nd resistance at R1 $1692/oz, R2 $1824 and any correction
at this range may seek support at $1610/oz, $ 1578.
Courtesy: Vijay Bullion
Mumbai Market
Mr.V.K.Agarwal, Director, Shirpur Gold Renery Ltd,
August.indd 64 8/9/2011 4:35:02 PM
shortly quoted that, he expects gold sale to be on downside
till august end. Buying spree among retail customers seems
to be affected by the rise in price. He expects gold price to
be range bound at $1600-1700/0z.
Courtesy: Shirpur Gold Renery Ltd,
Kanyakumari Market
Mr. T.R. Vino kumar, Partner, Ramayya Jewellers, told
that jewellery demand declined on mounting prices. He
added that customer sentiment is not so favorable and it
eventually reected on the jewellery sales .On gold he
opines that prices may slide down to Rs.20,000/10 gm to
test the support levels. In this bull trend, Kanyakumari did
business of 100 kg of gold in the month of July.
Courtesy: Ramayya Jewellers
Hyderabad Market
Mr. Deepak Agarwal, Director, Manokamana Gold,
positively said that, in spite of huge momentum in gold
prices, normal sales were witnessed in the Hyderabad
market. In July, total gold sales in Hyderabad region stood
around 700-800 kg and silver sales were around 10,000-
15,000 kg. He expects Gold prices to hover around $1690-
$1575 /oz.
Courtesy: Monokamana Gold
Ahmedabad Market
Mr.Haresh J.Acharya, Director, Parker Bullion Pvt
Ltd, informed that, weak sentiment was observed in the
month of July. Being a sowing month, July sales will be
comparatively lower than August to December sales.
Increased prices have further pulled down the sales. For
July, overall gold sales in Ahmedabad region stood around
4 tons and imports were at 8-10 tons. He feels that gold
price is likely to be around 22,580-25,000/10 gm.
Courtesy: Parker Bullion Pvt Ltd
New Delhi Market
Mr. Saurabh Sharma, Director, Delhi Spot Bullion Trading
Co.Pvt Ltd. informed that, mounting prices has decreased
the interest in bullion investment among the customers.
July Gold Sales stood at 500-600kg.He opines gold prices
in India will nd resistance at 24,800. On any correction
prices would nd support around 22,800.
Courtesy: Delhi Spot Bullion Trading Co.Pvt Ltd
All depend on how agricultural production would turn
around this year. On the other hand, real estate becomes
expensive as banks have raised the interest rate on
borrowing. At the same time, Indian banks are offering
attractive rate of interest on deposits. Now it is to be seen
what Indian investors would decide invest in FD now
and wait for correction in gold to buy or the gold rush
will continue? Festive season will kick off shortly. So
altogether, very interesting time is waiting for us. Keep our
ngers crossed!
August.indd 65 8/9/2011 4:35:03 PM
RSBL SPOT
An Overview
Gold continued to glitter at all time high
RSBL Gold Spot made a joyful ending after
keeping the prices in dark red in the previous
two months, mainly due to various uncertain
economic conditions across the world.
Initially it plunged to the low of Rs 21473
per 10 gram. This correction was brief and
it bounced back after taking notch at 38.2%
from the high of Rs 22752 levels. Recent
movement has eclipsed the previous two-
month movement to suggest that the traders
appetite is very much on the higher side. A
fresh rally has cleared the upside hurdle at Rs
22752 levels without much effort. Eventually
this could elaborate to the ascending channel resistance of Rs 24710 levels. There may not be any hurdle from the
fundamental front to hold back the prices. The current movement is also matching up with the global news on economic
conditions. This could sustain the price on a royal ride.
RSBL Silver prices too joined the party after
deep correction from the peak of Rs 74700 per
1 kg. Bears lost against the bulls at Rs 50521
levels after silver price stumbled to crack the
rising trendline support at Rs 50520 barricade.
Within no time, prices made through the
previous month high of Rs 57578 levels. Lavish
takeoff has given 38.2% return to the loyalist
of white metal in the previous month. Current
movement may not end here, after looking at
the recent movement. On upside silver price
could are up to Rs 62230 levels and 65492
successively to matchup with royal gold rally.
August.indd 66 8/9/2011 4:35:06 PM
USD 50 USD 35 Rs 750 Rs 1200 2 years (24 issues)
R

August.indd 67 8/9/2011 4:35:06 PM
Gold Spot Market, International
(Per Troy Ounce)
Spot gold 01st July 29th July %change
Australia(AUD) 1380.63 1438.33 4.09%
Britain(GBP) 925.06 989.88 6.77%
Canada(CAD) 1554.31 1425.00 -8.69%
Europe(Euro) 1023.71 1129.33 9.82%
Japan(Yen) 120183.00 124858.00 3.82%
Switzerland(CHF) 1258.18 1277.16 1.50%
USA(USD) 1487.17 1626.29 8.94%
Bullion - Data & Statistics
Monthly Exchange Data (Gold) (From From July 01-29)
Exchange Commodity Open High Low Close % Ch.
MCX
1
Gold Oct11 22177.00 23649.00 21885.00 23543.00 5.96
NCDEX
1
Gold Aug11 21949.00 23447.00 21844.00 23332.00 5.41
ICEX
1
Gold Aug11 21910.00 23356.00 21613.00 23185.00 5.69
COMEX
2
Gold Oct11 1503.00 1636.30 1479.60 1629.90 8.05
TOCOM
3
Gold Oct11 3905.00 4078.00 3854.00 4018.00 2.88
1- Rs/10 gms, 2- $/oz, 3- Jpy/gm
Gold Spot Market, India Rs/10gm
Spot Gold 01st July 29th July % chg
Delhi 22060.00 23400.00 5.90
Mumbai 21700.00 23162.50 6.52
Bangalore 21982.00 23517.00 6.75
Chennai 21872.50 23335.00 6.47
Kolkata 21980.00 23525.00 6.79
Hyderabad 21630.93 23215.00 7.07
Ahmedabad 21615.00 23142.00 6.83
GOLD Forward Offer Rate (GOFO)
01st July 29th July
1m 0.2200 0.2660
2 m 0.2340 0.2820
3 m 0.2460 0.3000
6 m 0.3140 0.3400
1 y 0.4100 0.4160
Currency
01st July 29th July
Euro/USD 1.45 1.43
USD/JPY 80.83 76.76
USD/INR 44.58 44.19
USD/AUD 0.92 0.91
USD/GBP 1.60 1.64
Silver Spot Market, International
(Per Troy Ounce)
Spot Silver 01st July 29th July % Change
Australia(AUD) 31.39 36.24 14.36%
Britain(GBP) 21.03 24.26 14.28%
Canada(CAD) 32.41 38.09 16.17%
Europe(Euro) 23.28 27.68 17.33%
Japan(Yen) 2732.61 3060.25 11.32%
Switzerland(CHF) 28.61 31.30 9.00%
USA(USD) 33.81 39.86 16.45%
Monthly Exchange Data (Silver) (From July 01-29)
Exchange Commodity Open High Low Close % Ch.
MCX
1
Silver Sep11 52394.00 60819.00 58144.00 59111.00 12.22
NCDEX
1
Silver Sep11 52133.00 60795.00 50800.00 58898.00 10.82
ICEX
1
Silver Sep11 52050.00 60830.00 50806.00 59118.00 12.24
COMEX
2
Silver Sep11 34.74 41.47 33.47 40.11 14.10
TOCOM
3
Silver Aug 11 89.40 102.50 88.30 98.60 9.13
1- Rs/kg, 2- $/oz, 3- Jpy 0.1/gm
Silver Spot Market, India Rs/kg
Spot Gold 01st July 29th July % chg
Mumbai 51967.50 58660.00 12.11
Silver Forward Offer Rate (SIFO)
01st July 29th July
1m 0.1400 0.2700
2 m 0.1500 0.2400
3 m 0.1400 0.2040
6 m 0.0900 0.1120
1 y -0.0200 -0.0220
August.indd 68 8/9/2011 4:35:07 PM
GOLD LEASE RATE
01st July 20th July
1m -0.03495 -0.05442
2 m -0.01725 -0.03908
3 m -0.00025 -0.02533
6 m 0.08325 0.09967
1 y 0.32400 0.32458
SILVER LEASE RATE
01st July 20th July
1m 0.04505 0.05558
2 m 0.06675 0.07258
3 m 0.10575 0.11467
6 m 0.30725 0.34800
1 y 0.75400 0.76625
LONDON FIXING (Per Troy Ounce)
GOLD AM GOLD PM SILVER PM
DATE USD GBP EUR USD GBP EUR DATE USD/cent GBP/Pence EUR/cent
07/01/2011 1492.75 932.10 1027.71 1483.00 926.07 1025.87 07/01/2011 3385 2112.98 2336.90
07/04/2011 1495.25 927.69 1029.36 1495.00 930.82 1029.97 07/04/2011 3410 2118.01 2349.29
07/05/2011 1498.75 930.79 1035.76 1510.00 937.02 1042.82 07/05/2011 3476 2157.67 2401.38
07/06/2011 1515.80 946.31 1056.23 1527.25 954.11 1066.37 07/06/2011 3538 2209.87 2467.22
07/07/2011 1526.25 954.80 1066.86 1527.50 955.76 1066.62 07/07/2011 3586 2244.76 2510.32
07/08/2011 1526.00 956.86 1069.08 1541.50 960.08 1076.17 07/08/2011 3628 2273.18 2541.51
07/11/2011 1543.50 966.32 1092.12 1555.50 976.71 1106.88 07/11/2011 3636 2279.62 2576.90
07/12/2011 1544.50 973.96 1106.38 1550.50 977.00 1107.34 07/12/2011 3491 2208.79 2507.90
07/13/2011 1571.50 984.71 1114.62 1579.00 988.36 1121.05 07/13/2011 3675 2304.80 2614.73
07/14/2011 1592.50 987.54 1119.04 1590.50 984.83 1117.32 07/14/2011 3940 2445.69 2778.56
07/15/2011 1578.50 979.64 1115.00 1587.00 985.35 1124.42 07/15/2011 3817 2367.87 2697.53
07/18/2011 1598.25 992.83 1136.33 1599.00 994.28 1136.70 07/18/2011 4033 2507.30 2870.46
07/19/2011 1602.00 994.11 1129.04 1601.00 992.99 1129.45 07/19/2011 4032 2501.24 2842.44
07/20/2011 1584.25 982.12 1116.77 1586.00 982.96 1117.85 07/20/2011 3859 2390.95 2713.78
07/21/2011 1600.50 992.44 1131.10 1601.00 985.11 1117.24 07/21/2011 3978 2460.87 2806.35
07/22/2011 1588.00 974.83 1103.01 1602.00 984.33 1118.09 07/22/2011 3967 2431.50 2753.90
07/25/2011 1618.50 995.02 1126.62 1613.50 991.28 1124.86 07/25/2011 4078 2503.38 2838.84
07/26/2011 1610.00 982.61 1112.26 1612.75 984.59 1114.93 07/26/2011 4034 2459.76 2785.91
07/27/2011 1621.00 987.69 1118.32 1625.00 991.76 1124.88 07/27/2011 4081 2490.69 2819.34
07/28/2011 1617.50 988.63 1125.53 1613.50 988.97 1129.27 07/28/2011 4019 2461.87 2810.49
07/29/2011 1613.75 991.67 1129.76 1628.50 992.08 1133.11 07/29/2011 3963 2435.02 2783.01
Disclaimer: Every care has been taken to present correct information. However, Bullion Bulletin & BBA are not
responsible for any divergence.
August.indd 69 8/9/2011 4:35:07 PM
Gold & Silver Historical Price In USD/Troyounce
Gold Silver
Year Rate Year Rate
1968 38.69
1969 41.09
1970 35.94 1970 1.635
1971 40.8 1971 1.394
1972 58.16 1972 1.976
1973 97.32 1973 3.137
1974 159.26 1974 4.391
1975 161.02 1975 4.085
1976 124.84 1976 4.347
1977 147.71 1977 4.706
1978 193.22 1978 5.93
1979 306.68 1979 21.793
1980 612.56 1980 16.393
1981 460.03 1981 8.432
1982 375.67 1982 10.586
1983 424.35 1983 9.121
1984 360.48 1984 6.694
1985 317.26 1985 5.888
1986 367.66 1986 5.364
1987 446.46 1987 6.79
1988 436.94 1988 6.108
1989 381.44 1989 5.543
1990 383.51 1990 4.068
1991 362.11 1991 3.909
1992 343.82 1992 3.71
1993 359.77 1993 4.968
1994 384 1994 4.769
1995 384.17 1995 5.148
1996 387.77 1996 4.73
1997 330.98 1997 5.945
1998 294.24 1998 5.549
1999 278.88 1999 5.218
2000 272.65 2000 4.575
2001 276.5 2001 4.52
2002 342.75 2002 4.665
2003 417.25 2003 5.965
2004 435.6 2004 6.77
2005 513 2005 8.83
2006 632 2006 12.84
2007 834.90 2007 14.92
2008 883.60 2008 11.29
2009 1095.20 2009 16.85
2010 1421.20 2010 30.93
August.indd 70 8/9/2011 4:35:08 PM
MUMBAI SPOT PRICES
July' 2011 Opening Closing Opening Closing Opening Closing
Date 999. Gold 999. Gold 999. Silver 999. Silver 995. Gold 995. Gold
01.07.11 21875 21735 52225 51710 21770 21630
02.07.11 21690 51585 21585
04.07.11 21730 21720 51660 51645 21625 21615
05.07.11 21745 21825 51585 52415 21640 21720
06.07.11 22025 22005 53905 53310 21935 21890
07.07.11 22255 22180 54370 53915 22150 22080
08.07.11 22195 22155 54405 54220 22090 22050
09.07.11 22380 54590 22275
11.07.11 22415 22460 54570 54555 22310 22350
12.07.11 22630 22560 53785 53035 22530 22455
13.07.11 22820 22855 54635 54885 22715 22750
14.07.11
15.07.11 23000 23010 56690 56775 22895 22890
16.07.11
18.07.11 23225 23285 58590 59135 23120 23180
19.07.11 23370 23290 59670 59030 23265 23185
20.07.11 23080 23075 58000 57445 22975 22965
21.07.11 23260 23245 59270 58855 23155 23140
22.07.11 23010 23105 57960 58430 22905 22995
23.07.11 23230 58995 23125
25.07.11 23430 23445 59620 59670 23325 23340
26.07.11 23355 23265 59445 59455 23250 23160
27.07.11 23295 23315 59615 59520 23185 23205
28.07.11 23270 23260 59175 59105 23165 23150
29.07.11 23250 23295 58605 58715 23140 23185
30.07.11 23415 59035 23300
June2011 Opening Closing Opening Closing Opening Closing
HIGHEST 23430 23445 59670 59670 23325 23340
LOWEST 21730 21690 51585 51585 21625 21585
AVERAGE 22745 22728 56320 56203 22641 22621
August.indd 71 8/9/2011 4:35:08 PM
August.indd 72 8/9/2011 4:35:09 PM
SPECIAL STRENGTHS
Most competitive prices

FIexibiIity of creating different pricing modeIs
for customers
Ready avaiIabiIity of BuIIion
Countrywide deIivery centers
Govt. recognized nominated agency
OTHER STRENGTHS
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THE MENTHOL PEOPLE
OUR NETWORK:
New Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Cochin, Vijayawada, Coimbatore, Madurai, Jaipur, Ahmedabad, ndore
Lucknow, Kanpur, Agra, Ludhiana, Hyderabad, Baroda, Rajkot, Vishakhapatnam, Chandigarh, Surat
1indal Group of Companies
Corporate Office: 110, Babar Road (Opp. World Trade Centre)
New Delhi - 110001, Tel: +91 11 46201000, Fax: +91 11 46201002
Email: jindal@jindal.bz, Website: www.jindal.bz
August.indd 73 8/9/2011 4:35:09 PM
August.indd 74 8/9/2011 4:35:09 PM

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