Gold import shots skywards

The import of gold has soared in the last two years even as gold dealers complain that they have sales of gold has not been very good in recent times.
According to a Nepal Rastra Bank (NRB) report, gold import increased by 301.5 percent in the nine months of the current fiscal year against the same period last year. Moreover, the gold import saw an increase of 3048.4 percent during the same period last year against the corresponding period the previous year.
The import of gold reached worth Rs. 9.6 billion during the nine months of fiscal year 2008/09 against Rs. 2.4 billion during the same period in 2007/08. The last year's import was up from Rs.76 million in fiscal year 2006/07.
Those involved in gold transaction have argued that the sudden increase in the gold transactions here is due to the growing tendency of the Nepalis to invest in gold although it has not as widespread as investing in shares.
Bijaya Satyal, former chief executive officer of Commodities and Metal Exchange Nepal Limited (COMEN), which works in trading of gold like that of shares, said that increased investment in gold as an alternative investment portfolio over the last two years has been mainly responsible for soaring import of gold.
Satyal, who was with the COMEN until recently, said that over 300 kilograms of gold is being sold for jewellery a month whereas over 100 kg is sold for investment.
Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (NEGOSIDA) was also of the view that as much as 25 percent of gold being purchased was for investment although this practice was insignificant a few years ago.
"The discrepancies between import and sales in the market show that increasing quantity of gold has been purchased for investment instead of utility," he said.
According to him, the gold sales saw a marginal increase this year compared to last year whereas the import has gone up dramatically. "The average sales of gold remained as high as 10 kg per day over the period of April 2008- April 2009," said Shakya. The sales figure was a little less that 10 kg per day during the same period in previous year, according to him.
The open general licence (OGL) system the government introduced for gold import two years ago also contributed to big increase in import in the last two years. With the OGL, anybody willing to import gold and silver can do so formally while people were restricted to import gold earlier. Only those who stayed abroad for a certain period could import gold before OGL was introduced.
Their argument holds ground with the growing import and sales of gold by the banks involved in transaction of gold.
According to NIC bank which has been involved in transaction of gold for the last two and half years, its import increased by as high as 40-45 percent and sales has grown by more than 50 percent in the last one year.
Saroj Guragain, chief at treasury and bullion department chief of NIC, said that the gold market was growing due to enhanced purchasing capacity of people and consumer culture.
NIC sells gold in 100 gram and 1 kg denominations. "There is a tendency of purchasing gold when prices remain low as well as when the prices are going up," Guragain said.
NRB executive director at the research department Trilochan Pangeni said that the increase in gold import in terms of value was also due to due to the rise in gold prices in the international market coupled with the depreciation of Nepali rupees against dollar this year.
Source: ekantipur