Gold investment up faster than change in stocks,say CSO data

In the comparable period of last fiscal,investment in valuables was far below at 67% of the investments in stocks of raw material and finished goods,as per Central Statistics Office (CSO) data.

This means despite the high price of precious metals,Indians are buying more of the stuff as a hedge against inflation cutting back into production of finished products,goods in semi-finished state as well as raw materials,plus changes in stock of strategic materials including grains. Since production of these items has a cascading impact on the economy while gold and silver has no such beneficial effect,the implications are even more sombre.

The huge jump in valuables will also push up the share of this sector in the GDP to above 2%. Those figures will,however,come later in the year.

India’s investments in stocks of raw material and finished goods was R48,959 crore in the first quarter of 2009-10,compared to which investments in gold and other precious metals was R27,857 crore,at 57% of the total stock. In the first quarter of 2010-11,the figure rose to 67% as gold prices soared.

The CSO collects data on the expenditure made on acquisition of valuables like gold,silver,platinum,diamonds,gems and gold and silver ornaments by calculating their total domestic production,offsetting them from net imports,since 1999-2000. The spread between gold and silver meant for industrial use and those used as store of value is calculated by using a norm of 95% for gold and 10% for silver.