India’s Gold Imports Decline For A Second Straight Month

From Staff Reports

Gold imports to India, the world’s biggest gold consumer, have fallen for the second straight month.

According to the Bombay Bullion Association, November purchases fell drastically from 59 metric tons last year to 12 tons during the same month this year. Likewise, year-over-year purchases for October fell from 68 tons last year to 14 tons this year.

The declines are especially alarming considering the last three months of the year are normally the peak gold season for jewelers. Those months are marked with a large amount of Indian weddings and also Diwali, the Festival of Lights, spread out over several days.

Some analysts reason that gold’s price was just too high for reputably frugal India. Gold hit a 28-year high last month at $850 an ounce, capping a nearly 30% gain in three months. It has since dipped below the $800 level, to close at $794 an ounce Friday.

“This is a price sensitive market and people are willing to wait for prices to dip before they make purchases,” Si Kannan, analyst at Kotak Commodity Services Ltd. in Mumbai, told Bloomberg. “Also a surge in scrap sales dented demand.”

Investors shouldn’t ignore the message here: Glittery India says gold is too expensive for their weddings and holidays.

But they should also be mindful that gold’s price dip opens a window for Contrarian investors.

[In case you missed it, Money Morning recently published a two-part series on gold investing, and detailed five global gold plays to make now. The first part ran down a litany of reasons why to get into gold. The second listed and reviewed each of the world’s 12 major gold mining companies, and presented five global profit plays in gold. To read Part II of that report, please click here. It is free of charge.]

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