Gold biscuit shortage: Gujaratis responsible
By siliconindia   |   Friday, 22 September 2006, 19:30 IST
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Ahmedabad: As per Economic Times, the shortage in the supply of gold biscuits world over, is due to the investment-savvy Gujaratis. They are the highest consumers of 50 gm and 100 gm gold biscuits on the retail front. Sales are expected to touch heights during the festival season, which is also the wedding season, and during Diwali, which is just a month away. Producers of gold biscuits in South Africa, Australia and Switzerland are working overtime to meet the increased demand. Since gold prices have come down from Rs 10,140 to Rs 8,800 per 10 gram, buyers are rushing to secure small-sized gold bars, planning for the festival and wedding seasons. Gujarat consumes on an average 200-250 tonnes yearly, out of the total gold import of 800 tonnes into the country, the reason being that the yellow metal is a safe long-term investment. The demand reduced in the previous 4-5 months after prices recorded highest in the 26-year period this May. “In India, it is only in Gujarat and Hyderabad where one finds a rush for gold biscuits. Of the estimated 600-700 tonnes imported into the country, nearly 90% is in the form of 1 kg bars,” said Rajan Venkatesh, director — bullion at Scotiabank, one of the biggest importers of gold. “As it takes more time to produce 100 gm bars compared to 1 kg bars, global refineries may take a few weeks to meet the soaring demand,” he adds. Paul Walker of GFMS, a London-based precious metals consultancy specializing in the research of global bullion markets said, “There is a high demand for gold in India, as they are the world’s largest buyer of the metal, and it is possible that there is a shortage of small bars globally. Refineries normally stock kilo bars, so any spurt in demand for smaller bars could create a short-term tightness.” The World Gold Council from London reported that the increased demand was encouraging after its slack period, due to price rise. Due to slump in demand, the production in gold refineries worldwide was cut over the past few months. But as soon as the prices dropped demand picked up, with the Gujaratis making the best use of this opportunity. The demand for 1 kg blocks also picked up. Sources said that MMTC is unable to supply 100 gm biscuits in Rajkot and Ahmedabad due to lack of stock. It may take a week before it can import “some” quantities from London. MMTC officials expect the shortage in 100 gm biscuits to continue for at least another month. Even the 10 tonnes of gold brought into the state last week by a foreign bank was not enough to meet the spurt in demand for 100 gram gold biscuits. Three big players — Scotiabank, ICICI Bank and MMTC — control nearly 70% of the gold imported into India. “The daily gold demand has nearly doubled from 500 gm to 1 kg and it may rise to over 2 kg per day by Diwali,” says Girish Venkat, ICICI Bank’s retail head in Gujarat. Currently, the global gold prices have dropped from a peak of $700 to $583 . “Prices may even drop to $540, but thereafter there will be a rebound and a sharp upward move, which would then take them to the previous high of $700 in a year’s time,” says Kunal Shah, executive director at Kunvarji Commodities.

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