Asset Switching Pushes up Gold Imports: Com Secy.

India's gold imports shot up to $ 7.2 billion in October against a monthly average of $ 4-5 billion, indicating "asset switching" by investors who are facing uncertainties in the stock market.

"Gold and silver continues to puzzle me. We had huge imports of gold in October. This is pure asset switching," Commerce Secretary Rahul Khullar said here.

Even for the cumulative seven-month period (April-October) gold imports went up by 64 per cent to $ 38.3billion.

Besides the domestic consumption, the country imports gold and precious metals for use as raw material in jewellery for exports. While gems and jewellery have also shown a smart growth of 31 per cent during April-October 2011 to $19 billion, bulk of the imports has been used for the domestic consumption.

"Yes, I agree with Commerce Secretary. Rising prices in gold for last two years is making it investor-friendly," Gems and Jewellery Export Promotion Council (GJPEC) Chairman Rajiv Jain said.

The asset switching has also led to a big rise of over 28 per cent in gold prices between April and October. On the other hand, stock prices have declined by nine per cent in the same period.

During Diwali, Jain said, investors had bought more of gold bars than jewellery. "Gold investment will go up. People are pulling out money from the market and investing here."

Source : profit.ndtv.com