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EDITIONS
Friday, 7 February, 2003, 08:26 GMT
Indians cash in on gold's high price
People are selling off jewellery to cash in on the high gold price
Jewellers shops are attracting sellers as well as buyers

Gold prices may be at six-year highs, but some long-time investors in the precious metal certainly seem to think it has climbed far enough.

India is the world's largest consumer of gold and drives world demand for the precious metal.

But people there are queuing up to sell their jewellery and imports of the metal have dropped.

Gold traders in India have reported that the supply of scrap gold has risen sharply in recent weeks as consumers were tempted into selling their old jewellery by their high prices.

"We came to buy gold for the wedding but instead we are selling because my mother said it was a good time," said one woman in a gold shop in Mumbai, formerly known as Bombay.

Traditional wealth

Gold has always been the traditional store of wealth in India.

Parents start buying gold jewellery at the birth of a daughter in preparation for the dowry she will need on her wedding day.
People sell old jewellery in the hope that in future they can buy the gold at lower prices

Nayan Pansare, Inter Gold

"Indians love gold and the yellow metal is associated with virtually every auspicious occasion - be it wedding, childbirth, new home or anything else," says Hiroo Mirchandani, India jewellery manager at the World Gold Council.

"It is both an instrument of adornment and investment.

"In rural India it is also a big status symbol, where people measure wealth in terms of gold holdings of individuals."

Recycled gold

Last year India imported 825 tonnes of gold.

"India usually takes about a quarter of physical gold demand - it's actually buying zero now," said Andy Smith at Mitsui Global Precious Metals.

Gold is also jostling for attention from other luxury items such as diamonds
Diamonds are competing with gold

"The entire trade, except the scrap business, has come to a standstill as everyone is watching the moves by the United States," said Nayan Pansare, a senior official of gold trading firm Inter Gold.

"People sell old jewellery in the hope that in future they can buy the gold at lower prices and they can make new jewellery."

Jewellers are currently buying gold ornaments at about 10% less than market prices.

Attitudes changing

But while more Indians are recycling gold the metal is also jostling for attention from other luxury items.

De Beers, the diamond group, says it has had considerable success in marketing diamonds as the fashion item of the day in India.

Other things that denote status are also increasing in appeal including foreign travel and overseas education.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Vanessa Heaney
"In India gold has always been more than a safe haven investment"
See also:

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