India Invokes Laksmi in Launching Gold Futures Trading

[Guest guest]

Here's an interesting case of timing a financial decision to

coincide with the blessings of Devi; in this case, her form as

Lakshmi, goddess of wealth and good fortune.

 

The article I quote below contained a lot of financial jargon, which

I edited out for ease of reading in this forum (the financial

wizards among you can read the full article at the link below). For

novices, "gold futures" are contracts to buy or sell a certain

amount of gold at a certain price on a certain future date; they are

considered a hedging instrument against any unusual rise or fall in

the precious metal's global prices. India's commodities exchange

(NCDEX) plans to offer three-month contracts.

 

MUMBAI (Tuesday, September 16, 2003) - Launching the trading of gold

futures in India during October's festival worshipping the Hindu

goddess of wealth could be fortuitous.

 

NCDEX hasn't given a specific date for the launch. "But it'll be

around Diwali," says the exchange's Chief Executive P. Ravi Kumar,

referring to the Festival of Lights held around end-October, when

Hindus pray to Lakshmi, the goddess of wealth.

 

Traders here hope that in time Mumbai - India's commercial hub -

will give London and other bullion centers a run for their money in

cornering a share of this market.

 

After all, India is the biggest consumer of the yellow metal, with

jewelers and traders buying a third of the world's annual gold

output, estimated at $24 billion last year.

 

The sheer size of India's physical gold market alone should ensure

that the volume of gold futures traded in Mumbai are significant,

says Stephen White, an analyst at N.M. Rothschild & Sons, the London

bank that has been setting global benchmarks for gold prices at its

St. Swithin's Lane office since 1919.

 

Some traders believe Mumbai's gold futures market, which will be run

by the National Commodities and Derivatives Exchange, or NCDEX,

could eventually become a regional benchmark for prices.

 

"India is starting out just at the right time as global interest in

gold appears to be very strong," says Andrew Driscoll, a gold

analyst at Perth-based brokerage Paterson Ord Minnett.

 

"With good futures volume, India will influence gold prices across

the world," affirms Driscoll. ...

 

Indeed, gold is at an eight-month high of around $380 an ounce.

Diminishing returns from bonds and geopolitical concerns have put

this traditional safe-haven investment back in favor.

 

Unlike small investors in developed countries, Indians have long

held a sizable portion of their liquid assets in gold. The country's

private and public sector gold holdings are estimated 13,000 tons,

or 9% of the world's total, according to Indian government data.

 

India also imports daily around three tons of gold bars, most of

which goes to the jewelry trade, one of the country's biggest export

earners. Gold futures are being launched here to enable this sector

to hedge against any price volatility in the major gold shipment

centers of London and Zurich.

 

Source: Finance, Singapore

URL: http://sg.biz./030916/15/3e7nb.html