Yesterday's top story: High gold prices push India's farmers toward silver
Silver artifacts and jewellery have made their way into farmers' hearts and homes across India as a cheaper alternative to the more expensive gold for investment purposes.
Posted: Friday , 11 Jan 2013
MUMBAI (Mineweb) -
Seventy year old Surinder Singh Ahuja, a progressive farmer who has been planting cotton on 50 acres in his Haryana land and wheat in 10 acres in Fazilka in Punjab for the past four years, is in an expansive mood.
It will be the first Lohri of his new daughter in law. Lohri is the Punjabi harvest festival and is considered rather significant for the farming community across India.
In the case of a new bride it is particularly significant, where traditionally, the in laws present clothes and gold jewellery to the her, and a grand feast is organised by the family. This year though, things are slightly different at Ahuja's house.
"Every year, we light a bonfire, and play games. It is an opportunity for the farming community to get together and bond and also a chance to allow the children to get a glimpse of our traditions. It is especially a grand time to gift gold to different members of the family. Only this year, we have decided to give them silver antique jewellery items," said Ahuja.
He pointed out that most houses across the area had shopped for the exquisite range of silver jewellery that was on offer at bullion houses across Punjab, with each piece inspired by ancient tradition.
Dotted with precious stones such as rubies, sapphires and saltwater cultured pearls, these silver artifacts appear to have made their way into most farmer's heart and homes.
Ahuja said most of the farming community across Haryana and Punjab in North India, were buying silver as a cheaper alternative to the more expensive gold for investment purpose. "The trend began at the end of 2010 when silver prices started rallying to a 30 year high. The price of silver has great potential to go even higher this year. Plus, most shops have been showcasing exquisite silver jewellery items. The lure is too much," he added.
Corporation Bank, which had opened a gold loan centre for small and medium enterprises and a gold loan shop at Chandigarh recently, said there was more interest in silver bars at the counter.
"The white metal is attracting a lot of investor attention locally as the silver price is forecast to rise this year. Gold, on the other hand, is static and its current high price is keeping most people away," said an official.
A delayed monsoon in India has resulted in high rural income from cash crops and higher grain prices, all of which are prompting farmers to turn to real estate and bullion.
Though gold is continuing to lure farmers, given the country's propensity to buy gold on most occasions, an increasing number of farmers appear to be gradually moving away from gold to investing in silver and in real estate.
However, there are regional variations. Though Lohri is traditionally associated with the harvest of the rabi crops across North India, and farmers take peanuts, flour, butter and various other food items to places of worship to thank God for a good harvest, a different scene plays out in the South.
Pongal is another harvest festival celebrated in South India, and is the Indian equivalent of Thanksgiving. In an agriculture based civilisation, the harvest plays an important part. Once a year, most farmers express their gratitude during these harvest festivals.
In Coimbatore, jewellery retailers are preparing for brisk sales and expect a 30% jump during the Pongal-Sankranti season, that will be witnessed across the country, from January 14. Sankranti is the worship of the Sun-God, who urges humans to go higher and higher, to more light, knowledge and wisdom.
As Bachhraj Bamalwa, bullion house owner said, "Pongal is an auspicious occasion for Tamilians and most buy gold to celebrate the occasion, as gold is the symbol of prosperity. Despite a price hike, we have witnessed a growth of around 10% already leading up to the festival. One significant thing that has come to our attention is the sale in silver, which has jumped past gold sales."
Stating that the farming community is knowledgeable and concerned about the government spending policies worldwide, he said most will continue to turn to precious metals as a safe haven for investment purposes.
Added Manoj Paridhar, a cotton farmer from Maharashtra, who produced 10,000kgl of cotton this year, as compared to 6,800kg last year, "Buying new land is not possible as prices are very high. Also, with gold prices running at an all time high I am not keen to invest in gold at this time," he said. Next option, silver.
Silver's many industrial uses are another reason why its price will trend higher in the future, say jewellers. Bullion shops across the country have also started hawking investment grade silver bars, with small farmers buying silver coins and smaller items like earrings and noserings studded with rubies.
This year, the traditional green and gold bangles jingling to the rhythm of dance, traditional gold-lined ghagras (skirts) and suits, will now gyrate with a new partner, silver kadas (thick bangles) and heavy necklaces marking the celebration of the harvest festival across India.
iPAd Version - Picture - A silver trader weighs his silver ornaments inside his shop in the western Indian city of Ahmedabad: REUTERS/Amit Dave