It would appear that something other than the usual wedding season is causing the most knowledgeable Indian gold buyers to massively increase their gold purchases by 1,300% YOY.

Something to watch - VHF

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Gujarat is buying gold, so bull run is here!

April 12, 2010

AHMEDABAD, India (Commodity Online): If you are an Indian investor who is desperate to get hints from bullion market, there is a short-cut for that — just watch how enterprising Gujaratis are acting in gold market.

Since 15th century, Gujaratis have been doing business from various small ports in India and abroad. They have been involved in the business of spices, textile, diamond, gold and other almost all tradeable items. The Gujarati acumen, as far as business is concerned, is the top most one in India. In India not Jews, but Gujjus do the business successfully.

So, if you watch the Gujarati trend in bullion, you will get the perfect hint for making a killing in the gold market. And, now the time has come for that. Just check out the recent gold imports in India.

You can definitely say that gold is in for a bull run. Because all the Gujarati traders are buying gold now and stocking it up. Any doubt? Just read this statistics. Despite gold prices still ruling high, the northern Indian state of Gujarat has imported around 1,300% more gold in the last quarter of 2009-10 than the previous fiscal.

Around 69.74 tonnes of gold was imported through the Air Cargo Complex in Ahmedabad, between January and March 2010. This is almost 13 times the 5.04 tonnes imported from January to March 2009.

This is a clear indication that Gujaratis are bullish on gold now. Moreover, they have more money with them now as the equity markets showed big leaps in the recent past.

Gold prices in the 2008-09 fiscal touched hitherto new highs of Rs13,000 per 10 gram and Rs15,500 per 10 gram.

In the financial year 2009-10, gold prices touched Rs18,300 per 10 gram in November but they soon fell and remained stable between Rs16,500 and Rs17,500 per 10 gram in the January-March period of 2010. In the financial year 2009-10 as a whole, robust demand for the yellow metal resulted in gold imports in the state rising by 39% as compared to imports in the previous fiscal.

However, higher import duty on silver has led to a sharp fall in the import of the commodity during April-March period. Silver import to Gujarat has gone down by 70.2 per cent.

And, if Gujarat is bullish on gold, it is almost certain that the metal is set to soar in the coming days.

The basic reason for Gujarati traders buying gold is that the wedding season is round the corner and they expect huge sales in the coming days and a rise in prices. Down south in Kerala also wedding season is on with the Easter getting over last week.

The normally-busy wedding season is underway in India, with festivals such as Akshaya Tritiya in May expected to further boost demand for gold jewellery.

Gold jewellery is the most common gift during religious events in India, which accounts for 20 percent of global demand for gold.

Indian parents give gold jewellery to their daughters at weddings for security.