WGC Initiative Could See Indian Gold Sales Soar on Farming Incomes
Source: Mineweb, Shivom Seth††(2/28/11)
"Cash-heavy farmers are moving towards buying gold in small quantities."
In the irrigated north Maharashtra's cotton belt districts of Jalgaon and Dhule, daily arrivals at the Agricultural Produce Market Committee have soared many times over. With farmers having a lot of cash on their hands, many are moving towards buying gold in small quantities rather than investing in farm machinery, say traders.
Even as China has been telling its citizens to buy gold, giving investors access to small term loans, the Indian office of the World Gold Council has also hit on a novel scheme, with officials excited about a revival in the Indian agriculture sector, which has grown to 5.7% of gross domestic product this year.
The innovative investment offering allows the purchase of gold bars and coins through a systematic investment plan (SIP) scheme, which is similar to a recurring deposit.
Every month, on a specified date, an amount that the farmer chooses is invested in the gold scheme. This is to ensure discipline in an investor who can then keep the amount ready for the next month.
Several brokerage firms in Mumbai are in the midst of discussions with mutual funds, post offices and micro-finance institutions to push similar gold buying schemes. The World Gold Council has also brought on board around 600 post offices and select micro-finance institutions to retail gold coins and bars to rural buyers.
Given the bright outlook foreseen for 2011, with agriculture set to contribute significantly and a general rise in income levels of the agrarian community, gold demand should get a new boost.