Tremors In Bullion Market

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Tremors In Bullion Market
Dinesh Parekh - 03 September 2020

In 2020 gold prices have breached the psychological $2,000 per ounce for the first time after 2011 when gold price reached $1,923 per ounce.

 This year seems to be the year of precious metal, as in the past eight months gold price has increased by
40 per cent.

 New investors in gold have emerged, for example, Warren Buffet of Berkshire, who once mocked, makes a bet on the gold market. He changed his position in Barrick gold, buying 20.9 million shares or 1.2 per cent of the company’s outstanding stock with the current market value of $505 million.

In the past, Buffet cautioned against investing in the metal because it is not productive like a farm or company. He might have been averse to gold in the past, but he has bet big on metal before in 1997 when he bought 129.7 million ounces of silver.

 Paulson & Co, run by billionaire hedge fund manager, John Paulson, added its holding in Barrick Gold. Recently, its shares rose to 7.4 per cent in a single day after trading in Newyork market.

 Billionaire Peter Grandich of Grandich Co who bought gold after selling all his shares and savings said that the gold price will touch $700 per ounce.

 As India is dependent on imports, any change in the global market will immediately reflect on the domestic market price.

In the Indian market gold and silver prices have recently touched the new high as import cost of bullion metals have gone up after a rally in the global market. As the production of these gold and silver metals in India is negligible

As India is dependent on imports, any change in the global market will immediately reflect on the domestic market price.

In the case of silver, we have seen such record prices in the year 2011 when the price touched `77,000 per kg. Looking at the present situation silver prices are likely to go up further to `80,000 per kg in a short time and will break the previous record, a leading trader said.

 Gold prices, which was around `51,200 on August  26 is also likely to go further up to `65,000 per 10 gms before Diwali.

 The jewellers are under extreme stress as they fear that soon people may rush to sell their ornaments to get rid of the liquidity crunch which they faced due to job losses.

 However, there is hope in Zaveri Bazaar in Mumbai as most of the traders and importers had honoured their commitment to deliver gold and silver at the highest level price against costlier forward deals committed at lower prices.

 The CEO of RSBL Company, Prithviraj Kothari mentions that at this high price, new interested investors are entering the market to buy gold and silver bars, whereas, old investors are not daring to take the risk.

 Prakash from Dilkhush Company, a silver bullion trader says, “All traders and small investors are buying silver bars at all prices. Our sales have decreased by 50 per cent but still, we sell 200 to 250 kg silver bars per day with limited staff members.”

 Silver ornaments and utensil shopkeeper, Hitesh from Hema Jewelleries informs that till transport facilities gain normalcy they are not going to welcome more customers. They will open the shop to update the accounts and pull down the shutter after that.

As uncertainty lingers with loss of economic activity and exponential rise in coronavirus cases, the revival of businesses will take a long time. However, it is predicted that the price will continue to rise.


The author is a journalist and bullion researcher in Mumbai

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