This little bit of info is pretty staggering if taken in context.

India is the largest consumer of gold in the world, in 2007 importing 759 tonnes of gold. In 2008 that number dropped to 402 tonnes.

Considering that gold closed up for the year, it means that the difference in demand was made up in investment buyers of gold.

That is a staggering thought!

Well, one of the more significant final tallies of 2008 is in, and it confirms that which we have been cautioning for the better part of the year that passed. Gold imports by India, traditionally the single largest global buyer of the metal, fell by 47 percent in 2008. Only 402 tonnes were demanded by the country, as high gold prices and a slowing Indian economy ended up nearly halving demand, according to the The Bombay Bullion Association.

The Mumbai-based trade body said that India’s gold imports in last month dropped by 81 percent to total only 3 tonnes (just over 96,000 ozs.), as compared to 16 tonnes being imported in the same month of 2007. The deadly bombings in the centre of Mumbai were also seen as having affected demand in December. Unless gold can bank on investment demand to more than offset the slump in Indian purchase tonnages, we must remain on alert and exercise caution. Demand destruction of this type is not health-beneficial for our market.

One ought not take one of the pillars of gold demand and treat it as if it mattered little. The President of the BBA, Mr. Suresh Hundia made it quite clear: “Imports were down because prices rose. There were not many marriages or festivals either,” In 2007, India imported 759 tonnes of gold (in other words, almost as much as the gold ETF has amassed in four years’ time).

This entry was posted on Friday, January 2nd, 2009 at 7:08 pm and is filed under Archived. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.