The Hindu Business Line : Can platinum take the lure off gold?

Mumbai April 15 After gold, it is platinum; or, is it? The phenomenally successful sales of gold in India over the last ten years have prompted platinum sellers to target this huge market.

With rising incomes on the back of strong GDP growth, the demand for gold has been burgeoning. India is a major market for gold jewellery. At about 700 tonnes a year, India is the world's largest importer of the yellow metal. Annual gold inflows are valued at a little over $10 billion (about Rs 45,000 crore), making it impossible to believe India is a poor country.

Rising incomes have also meant that some consumers used to the relatively low-priced silver are graduating to expensive gold. The logical extension seems to be that gold users will begin to take interest in platinum, another precious metal.

India's ravenous appetite for gold has probably encouraged platinum producers and sellers to believe that consumers here would turn their attention towards that precious metal. Platinum is of course considerably more expensive than gold. Currently, gold is traded in the international market at about $675 an ounce, while platinum is offered at $1,270/oz.

Publicity tack

Advertising and publicity campaigns to promote retail sales of platinum have already started in the country. The metal is being projected as a symbol of prosperity. Astrologers have been roped-in to induce buyers. The tack used by marketers is an appeal to the religious beliefs of people.

There is an appeal to purchase platinum in addition to gold on the forthcoming Akshaya Thritiya day (April 19-20). It is believed that purchase of gold on that auspicious day would ensure wellness and prosperity.

Interestingly, until a last few years back, unlike in the north, Akshaya Thritiya (the third day in the waxing phase of the moon during Chaitra, the first month of the Hindu calendar) was never known to be a popularly auspicious day for purchase of gold, among people in the southern parts of the country.

However, seeing the market potential, gold marketers have used aggressive marketing tactics to appeal to the religious sensibilities and astrological inclinations of consumers to successfully project the day as an auspicious occasion to buy the yellow metal.

Consumer's choice

Will platinum succeed or replace gold, at least partly? It is not easy to predict. Much of course depends on consumer acceptance of the metal, described in publicity material as `white metal'.

Gold has a very long history in the country and enjoys mythological, religious, social and economic significance. It is largely perceived as a safe haven investment and hedge against inflation. Platinum's qualifications are yet to be tested.

It is of course wholly possible that over time, platinum will begin to enjoy consumer acceptance; but it appears unlikely that it would hurt the market for gold anytime soon. Indeed, both the metals together can actually lead to an expansion of the overall precious metals market in the country.

In the western world, the craze for gold began to wane with education and widespread prosperity. Western markets are now called `mature' markets for precious metals. India is a growing market and has a long way to go before it matures. Till then, precious metals marketers will have a field day.

More Stories on : Metals | Gold & Silver

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
General Motors chief Wagoner coming today

`Cement imports from Pakistan may not impact retail costs'

`All steps taken for moderating inflation'

Education loans: 80% goes for domestic courses

Townships, new mantra for real estate developers

Support package is key factor in fab location

Gold may trade within ranges

Can platinum take the lure off gold?

Credit-deposit ratio hits a high of 74.13%

Cos with captive coal, ore mines may get nod to sell excess output

Sensex may strengthen further this week

Home and beyond is where the money is