World looks towards India for Jewelry boom !

[nikkir]

SEARCH " MCX NCDEX TRADING TIPS BLOG " FOR COMMODITY TIPS IN GOOGLE

China's extreme economic growth rates were met by both cheerleaders and detractors, many of whom were afraid that the real estate expansion was just another repeat of the US growth from 2002-2007. One of the key elements of the Chinese economic situation is its impact on precious metals, with many analysts stretching the news to say that a Chinese slowdown is bad for metals. But how? The greater impact on metals comes from India.

India remains as one of the leading buyers of foreign gold and silver for use in its jewelry operations. The key ingredient to the demand, however, is largely dependent on natural factors, not on economic factors.The annual monsoons are important piece of the Indian economy. Weak rains mean poor farm business, while strong rains from the wild winds bring economic prosperity. This year, India hit the jackpot, and silver demand in the second half and later looks to be better than ever.

Traders now expect that the Indian market will buy more than the 1,000 tons of silver purchased in 2009, and expectations are as lofty as 1,200-1,500 tons. Such a volume of growth, particularly in a fixed supply market like silver, often brings higher prices.

To Indian consumers and investors, gold and silver are more than your average aluminum foil. Everyone from the ultra-wealthy to sustenance farmers view precious metals as something sacred and beautiful, and most of them also view it as an attractive investment that has a strong hedge against inflation and economic fallout.The summer months usually bring weak consumption numbers, as farmers divert resources to purchasing pieces of equipment and seeds to plant their farms. This year, however, it wasn't internal growth that buoyed India's precious metals trade. In fact, India's jewelry exports in June 2010 rose by a whopping 30.4% in June alone. This type of growth, especially if it is later sustained by internal consumption, is all the better for precious metals investors.

Where Investment Theory Fails Metals

Investors have long believed that it is not so important to pick individual winners as it is to be in the right sectors or places at the right time. That kind of thinking has run rampant in recent years, as exchange-traded funds and niche products push investment dollars away from individual picks and plays and into whole baskets of funds that target specific countries and sectors.While investors lay on the sidelines worried about what may happen with Chinese real estate and consumer-level growth, precious metals investors are poised to pick up the profits regardless of what happens.

As it is, India is exponentially more important to silver and gold than China, and the two countries, despite being neighbors in the Asian arena, aren't all that interconnected. Indo-China trade accounts for roughly $60 billion annually compared to a total productive output in India of $1.16 trillion. Even a near collapse in the Chinese economy (which is still growing, despite recent weakening) would have only a minor effect on the stability of the Indian economy, as well as the demand for silver and gold. Fear the news...it is lying to you.