April 11, 2006	Tuesday	Rabi-ul-Awwal 12, 1427

KARACHI, April 10: As the price of gold rises in the local market on the back of continuous upward rally in global markets, bullion dealers believe that the people have started investing in gold in Pakistan but the analysts have a different view.

Gold and bourses are now neck-to-neck in breaking new barriers, thus generating interest among the cash-rich people to increase their profits in anticipation of further increase in prices. However, a confusion persists as to who (stock players, real estate people, businessmen or salaried class) are the real gold buyers.

The gold price (10 grams) has surged from Rs10,480 to Rs11,552 on April 10, compared to Rs10,072 on January 1, 2006. From the last year, the gold prices have been touching new peaks thus breaking the previous all time high record of prices in the country. Gold crossed the Rs10,000 mark in December 2005, followed by Rs11,000 mark in February 2006.

Currently, one tola gold is priced at Rs13,500 compared to Rs10,600 in September 2005.

“People earning from the bourses are investing in gold,” Kamran Khan of Tessori Group said adding that this is the right time in investing in gold as it is still cheaper in the local market as compared to international rates.

“May be there are many people from the real estate business who are cashing their luck in gold after making handsome earnings from plot and house sales,” he added.

Currently, he says that people are investing in buying jewellery sets as a new marriage season has begun in the month of Rabi ul Awwal. “There is not much interest in securing gold bar (biscuit) for investment purpose these days,” he added.

The gold price has been on the rise as central banks of various European and Far Eastern countries are out to pile up their gold reserves by cashing out dollars and securing gold from the markets, Kamran said.

The yellow metal is considered as a safe haven in foreign countries as its buying gathers momentum when some political and economic unrest loom large in the world, especially in countries like Iraq, Iran or the Middle East.

In Pakistan - parents give their daughters jewellery sets on their marriage in order to secure their future in terms of assets and liabilities. Besides, women have been very fond of glittering things no matter even if it holds an artificial look.

It has been noticed that in marriages there has been a trend among women in wearing artificial jewellery imported from India owing to frequent snatching incidents outside the marriage halls. Even it has been seen that many families are now making artificial bridal jewellery sets for their daughters.

Kamran, who is also chairman of Overseas Investment and Commerce Committee of the FPCCI, did not agree that the trend of wearing artificial jewellery sets was on the rise.

Gold has its fascination and this is what women have to show their glitter at ceremonies,” he said adding that the gold sales have not been affected under such kind of changing trend.

Chairman All Pakistan Gem and Jewellers Association (APGJA), Saeed Mazhar Ali, said that the stock market players usually invest in gold when its rates touch new height. They are not regular investors in gold. They usually take plunge for short term goals; he said adding that there might be some stock players now investing in gold as rates are flying high.

However, he said that the real estate players, after whirlwind profits, usually bought gold to secure their investments. They think that the gold is the real substitute of property. Besides, there are other people like high-salaried class, gold traders, and businessmen who continue to make investment in the yellow metal.

Frankly speaking, there has been no slackness in gold bars and jewellery buying among the people despite inflationary trend in prices of essential items as well as in bullion rates, he said adding that there is a marked difference in jewellery set prices compared to two years back but the people are buying it without any hassle, he added.

In Karachi where only Zaibunisa Street in Saddar was famous as the hub of jewellery shopping but now time has changed and every area has its own Sarafa market, which means that gold demand is picking up,” he said.

“A buyer is not a loser in gold. It pays the buyer in the longer run no matter how much he has spent in buying jewellery or gold bar,” Saeed said adding that rising rates in domestic market is a harbinger for the buyers to reap benefit in coming months or years. Mohammad Sohail of Jehangir Siddiqui Research did not agree that people were crazy for gold in absence of any regulated market like stock markets in Pakistan.

There might be some investment being made by the people but he ruled out the possibility that stock market players were diverting their profits towards gold in a big way.

“If there has been some huge investment made by stock players in the gold market, the bourses would have crashed by now,” he said adding that the stock market players are actually placing their money in the real estate.

“People do not have trust in investing in gold as there is no proper regulated market,” he said while referring to the commodity exchange in which gold is scheduled to be traded in future.

In absence of any yardstick to check the sales of gold available with the government or gold dealers, it is hard to work out country’s annual consumption of gold.