gold and silver indian scenario - · pdf fileb. n. vaidya & associates gold exports-india...

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Gold and Silver Gold and Silver Indian ScenarioIndian Scenario

BhargavaBhargava VaidyaVaidya24/08/200724/08/2007

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

India Market StatusIndia Market Status

Physical MarketPhysical Market•• Only OTC Only OTC

Futures Futures

•• Active On Local Exchanges Active On Local Exchanges

MCX Lion shareMCX Lion share

•• Forward Forward -- very small (OTC)very small (OTC)

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Driving Factors Driving Factors -- (India)(India)-- II

•• International PriceInternational Price

•• Government SupplyGovernment Supply

•• Festive demand ??Festive demand ??

•• Scrap Supply ????Scrap Supply ????

•• Interest Arbitrage / LC ImportsInterest Arbitrage / LC Imports

•• Taxes Levies and ConditionsTaxes Levies and Conditions

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Driving Factors Driving Factors -- (India) (India) -- IIII

•• Festival BuyingFestival Buying•• Marriage BuyingMarriage Buying•• Collection for FutureCollection for Future•• Investment Buying Investment Buying

-- Harvest Harvest -- Gold / Silver swap ???Gold / Silver swap ???

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Driving Factors Driving Factors -- (India) (India) -- IIIIII

Indian Bullion MarketIndian Bullion Market

•• Volatility SensitiveVolatility Sensitive•• Gold Price SensitivityGold Price Sensitivity•• Silver Price SensitivitySilver Price Sensitivity

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Factors Affecting Gold Factors Affecting Gold -- II

TRADITIONALTRADITIONAL•• USD USD –– Currency inverse relationCurrency inverse relation

•• GEO POLITICAL SITUATIONGEO POLITICAL SITUATION-- Safe Haven StatusSafe Haven Status

•• MINERS HEDGING POSITIONMINERS HEDGING POSITION

•• CENTRAL CENTRAL BANK'sBANK's ACTIVITIESACTIVITIES

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Factors Affecting Gold Factors Affecting Gold -- IIII

NEWNEWMedia RoleMedia Role

•• HEDGE FUND ACTIVITIESHEDGE FUND ACTIVITIES

•• ETFsETFs

•• NEW INVESTOR CLASS NEW INVESTOR CLASS

-- in mines , in metals in mines , in metals

•• DERIVATIVES RELATIONSDERIVATIVES RELATIONS

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Gold ImportsGold Imports

•• Restricted ThroughRestricted ThroughNominated BanksNominated BanksNominated Government AgenciesNominated Government AgenciesSelect Category of ExportersSelect Category of Exporters

•• ADVANTAGEOUSADVANTAGEOUSNumbered barsNumbered barsWeight in metricWeight in metric

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Private Sector SupplyPrivate Sector Supply

•• Location FriendlyLocation Friendly

•• To Improve ServiceTo Improve Service

•• Two way Trade possibleTwo way Trade possible

•• To Integrate Bullion players with To Integrate Bullion players with International MarketInternational Market

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Gold ExportsGold Exports--IndiaIndia

•• Can Bullion Be Exported ????Can Bullion Be Exported ????•• Imported Bars Re Imported Bars Re -- ExportedExported•• Value Addition NormsValue Addition Norms-- JewelleryJewellery Plain Gold : Plain Gold :

Hand made, Machine madeHand made, Machine made-- JewelleryJewellery Gold StuddedGold Studded-- Articles and MedallionsArticles and Medallions

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Gold Loan (India)Gold Loan (India)

•• Domestic Domestic Restricted to 180 daysRestricted to 180 days

•• For Exports For Exports Maximum 270 daysMaximum 270 days

Direct supplier list restrictedDirect supplier list restricted

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Supply Gold Supply Gold -- (India)(India)

•• FRESH IMPORTS 68 %FRESH IMPORTS 68 %-- SalesSales-- LoansLoans•• SCRAP RECYCLING 30 %SCRAP RECYCLING 30 %•• OTHERS 2 %OTHERS 2 %

-- Government Supply Government Supply -- Domestic Loans / OthersDomestic Loans / Others-- Forwards ??Forwards ??

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand Demand -- GoldGold

Factors driving DemandFactors driving Demand

•• Marriage / Festival SeasonMarriage / Festival Season•• Gifts Gifts -- CorporateCorporate•• Investment outlookInvestment outlook•• Status of economy (Rural)Status of economy (Rural)•• New Products New Products –– ETF’sETF’s

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand Gold Demand Gold –– (India)(India)

•• JewelleryJewellery 60%60%

•• Investment Investment (Incl. Crude Jewellery) (Incl. Crude Jewellery) 32%32%-- GAP / Collection /CoinsGAP / Collection /Coins-- Returns related InvestmentReturns related Investment

•• Industrial/Coins Gifts } 8% Industrial/Coins Gifts } 8% •• ETF & Exchange Related }ETF & Exchange Related }

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand Demand -- GoldGold

Factors deterrent to DemandFactors deterrent to Demand

•• Price VolatilityPrice Volatility•• White GoodsWhite Goods•• PricePrice•• Economic Conditions (Rural)Economic Conditions (Rural)•• Paper substitutesPaper substitutes

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand for Exports Demand for Exports -- GoldGold

•• JewelleryJewellery

•• IndustrialIndustrial

•• Other Trading / InvestmentOther Trading / Investment

BASE STOCK REQUIREMENTBASE STOCK REQUIREMENT

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Factors Affecting Silver Factors Affecting Silver -- II

TRADITIONALTRADITIONAL•• Gold Gold -- RelationRelation

•• Base Metal Base Metal -- Relation Relation

•• By By -- Products PositionProducts Position

•• Industrial DemandIndustrial Demand

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Factors Affecting Silver Factors Affecting Silver -- IIII

NEWNEWMedia RoleMedia Role

•• Hedge Fund ActivitiesHedge Fund Activities

•• E T F E T F

•• Derivatives RelationsDerivatives Relations

•• Chinese FactorChinese Factor

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Supply SilverSupply Silver

•• Imports 55% Imports 55% ––75 %75 %

•• Scrap / Disinvestment 20% Scrap / Disinvestment 20% -- 40% 40%

•• Government Supply 1% Government Supply 1% --30%30%

In past India In past India -- Net Exporter of silverNet Exporter of silver

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand Demand -- SilverSilver

•• SilverwareSilverware•• JewelleryJewellery•• Coins Coins –– Investment BarsInvestment Bars

•• IndustrialIndustrial

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Demand Demand -- SilverSilver

Factors driving DemandFactors driving Demand-- Industrial almost steadyIndustrial almost steady

•• PricePrice•• Economic Condition (Rural)Economic Condition (Rural)•• FestivalsFestivals•• Positive Price forecastPositive Price forecast

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Investment AvenuesInvestment Avenues

•• Physical (India Physical (India –– Y)Y)•• Depositary / D Depositary / D ––mat (India mat (India -- ? )? )•• Unallocated (India Unallocated (India -- N)N)•• ETF (India ETF (India –– Y)Y)•• Futures / Forwards (India Futures / Forwards (India -- Y)Y)•• Options (India Options (India -- N)N)•• G.A.P. (India G.A.P. (India -- ? )? )

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

Industry Target Industry Target -- IndiaIndia

•• Make India No. 1 Bullion Dealing CenterMake India No. 1 Bullion Dealing Center

•• Price DiscoverersPrice Discoverers

•• ChaneliseChanelise Huge Reserve Stock of Gold Huge Reserve Stock of Gold

•• Clearing House of the WorldClearing House of the World

B. N. VAIDYA & ASSOCIATESB. N. VAIDYA & ASSOCIATES

TARGET 2010TARGET 2010

INDIA INDIA A A

MAJOR MAJOR BULLION & JEWELLERY BULLION & JEWELLERY

HUBHUB

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