India Gold - Customer Zone - Reuters

SINGAPORE GOLD COMMODITIES ————————-- GOLD GOLD: REBOUNDS HITS WILL RECORD RISK INTERNATIONAL BATTERED AUGUST AVERSION ON HIGH JAPAN 2011 BY ABOVE BANISH DEBT SHARPEST ENERGY $1,622/OZ DOWNGRADE CORRECTION WEEK—SPECIAL LOSS SINCE DESPITE FEARS? MAY PDF CORRECTION FEARS NOVEMBER AUGUST JULY 2010 2011
2011
ETFs let investors profit from price rises without owning physical material and have become popular among Western investors.
Growth of such funds has helped gold prices take off, as the increasing holdings add to the demand for bullion. "The ETF story
that has driven gold in the past four or five years is a new dynamic in silver," said Pervan.
"Further build-up in silver ETF demand may be slightly more than what you'll see in gold, a lot of which is driven by a lower entry
point to precious metals provided by silver -- it's 1/40 of gold's price, which is always going to be a trigger for small investors."
The gold-silver ratio, or the number of ounces of silver needed to buy one ounce of gold, dropped to a one-month low of 41.4,
off its lows under 32 in late April when spot silver prices rallied to the record high.
IShares Silver Trust, the world's largest silver ETF, rose more than 1 percent on the day to 9,633.95 tonnes by July 13, nearly 15
times the fund's holdings at inception in April 2006. The world's biggest gold ETF, SPDR Gold Trust , reported holdings at
1,225.41 tonnes, 151 times its holdings when the fund was launched in 2004. It would rank No.6 on the list of the world's top
gold holders, right after France and ahead of China.
Silver prices in the second half will also hinge on a pickup in demand from India, the world's largest bullion consumer and
fourth biggest silver consumer in terms of fabrication demand. A number of gold ETFs have attracted increasing interest from
investors in India this year, but silver ETFs are yet to launch due to regulatory uncertainties.
GOOD MONSOON TO UNLOCK INDIA BUYS
Retail investors in India rushed to buy silver bars and coins during the metal's meteoric rise early this year, only to rue their luck
when the May rout shaved a third off the metal's value. But dealers say good monsoon rains and bulging farm incomes could
bring back buyers.
"If farmers get good crops, certainly demand would rise from rural households," said Harshad Ajmera, proprietor of wholesaler
JJ Gold House in the eastern city of Kolkata. The monsoon has so far gone smoothly and bodes well for rural earnings.
But silver imports will slow at least for the next month or two, coinciding with India's monsoon season, which typically sees a
lull in gold and silver buys as farmers focus on sowing crops. Rural areas make up 70 percent of India's gold demand and more
than 60 percent of its silver consumption.
"I usually buy gold and silver jewellery at the time of the Diwali festival," said Vikram Patil, a 50-year-old cotton farmer from
Jalgaon in India's western state of Maharashtra, referring to the Hindu festival of lights, which usually falls in October. "If my
earnings improve, I will invest more in jewellery."
A piece of raw emerald is displayed at the Emerald Museum in Bogota August 17, 2011. REUTERS/Fredy Builes
34