| Will Indians Begin Purchasing Vastly Increased Quantities of Silver? |
Could this unusual decision which has massive bullish implications for silver have been direct retaliation by India for Washington's threatened sanctions on the nation if India does not continue purchasing Iranian oil using dollars?
While gold's southward journey continued for the third straight day in Mumbai Monday, investors showed a keen interest in buying one kilo silver bars also known as `chausar' given the excise duty exemption.
Silver, the poor man's gold, has turned out to be the winner in India's budgetary excise duty cuts by escaping the attention of the Finance Minister. Investors in India are keen to push silver above the recent channel high with traders insisting that it will be more than speculation that will drive demand for the white metal.
"Silver has clearly been exempted for a reason,'' said Prithviraj Kothari, president of the Bombay Bullion Association. ``Out of $50 billion worth of imports of precious metals into India, silver imports were just $4 billion, while that for gold was the other $46 billion,'' he said.
On Friday, India's Finance Minister exempted branded silver jewellery from excise duty. Silver coins of purity 99.9% and above were also exempted from excise duty. However, the excise duty on refined gold was doubled from 1.5% to 3%.
Kothari was of the opinion that silver coins and silver bars, called `chausar' in the local lingo and among bullion traders across the country, would soon sell like hot cakes. "There is not much demand for silver jewellery among Indian investors. Most go for high value silver coins or for a 1 kilo silver bar. The latter is expected to fly off the shelves now and investor interest would surely be pushed higher as a consequence of the double whammy on gold in the budget,'' he added.
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