Stock Market

Best year in four for Diwali gold sales, ETFs also in focus

Manisha Gupta

Dhanteras marks the first day of Diwali and jewelers have already declared 2016 as the best year since 2012 as far as festive buying goes. And it may be the beginning of good times for gold as an asset class.

While this year didn’t start well and the first half saw a big dip in imports, the lowest in 6 years on the back of excise duties and protests against that move, the numbers are improving sharply. Up to 70 tons of gold may have been imported in October alone, up from 20 tons in May. Silver sales are up 50 percent over last month.

To ride on the festivities the government has launched the sixth tranche of  Sovereign Gold Bond, where you don’t own the gold but your investment moves with the price of gold and you also earn an extra 1.50 percent per annum on the investment. The sixth tranche also is on discount of Rs 50/gm to lure the buyer.

The Bombay Stock Exchange and the National Stock Exchange have announced that it will stay open until 7PM on the day of Dhanteras so that investors can buy.  Other precious metals like silver and platinum can be bought in physical form only.

And it isn’t just the shops and exchanges which are buzzing with activity , the online space is also reporting heavy interest. With all offering discounts, freebies, exchange offers , gift coupons and money back offers. Karat Lane and Diamond Blue, two diamond e-tailers, are claiming robust sales.

A large part of buying is driven by the best monsoon in three years and a price correction just ahead of the festivals. But even with the decline, gold prices are 20 percent up this year with expectation of support on the back of global inflation picking up and Brexit fears weighing. Gold is being recognized as an important asset for a diversified portfolio and its risk mitigation abilities.

It is considered auspicious to buy gold during Dhanteras or start a new venture as it is considered that whatever you buy or start this day multiplies.
It’s due to accumulation of the metal on occasions and festivals that Indian households are known to hold more than 22,000 tonnes of gold, more than the reserves of many central banks. And Indians don’t just buy gold for themselves, they offer the metal in temples and shrines too, a custom followed for hundreds of years, enriching the temples in the process.