Why can't those Nepalese women settle for a nice ETF?

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Gold's Glitter Remains Despite Spiralling Price

By Kuvera Chalise and Eliza Manandhar
The Himalayan Times, Kathmandu, Nepal
Friday, August 20, 2010

http://www.thehimalayantimes.com/fullNews.php?headline=Gold%27s+glitter+...

KATHMANDU, Nepal -- In the wake of complaints lodged by a few gold traders, Nepal Rastra Bank [the Central Bank of Nepal] on Tuesday directed banks to "temporarily" suspend gold supply.

The suspension has resulted in a shortage of gold in the market, spurring price hikes, gold traders say.

"While the price hike due to gold shortage is making a big hole in customers' savings, the government is losing revenue as well its stack of Indian currency," Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers' Association (Negosida), told The Himalayan Times. The central bank's temporarily stopping the supply followed some traders' complaints that they were not getting enough of the yellow metal.

... Dispatch continues below ...



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Shakya said Negosida made efforts to manage the gold supply among the traders by recommending maximum 200 grams per trader per day. "But the demand has gone up to 35 kilograms per day," said Shakya, adding that the central bank-prescribed 20 kilograms per day is not enough to meet market demand.

Suspension in the supply of gold fuelling the price hike does not mesh well with the approach of Teej, the festival of Hindu women, when gold trading picks up.

But central bank Governor Dr Yubraj Khatiwada said the bank would make a decision in a day or two and that the central bank would ensure that the customers did not bear the brunt during the festive season. "The central bank took the decision" of temporarily suspending gold supply "after some traders complained that they didn't get the precious metal," he added.

According to Shakya, traders were forced to purchase gold from the Indian market to meet demand. "Around 1.87 million rupees go to India if the central bank does not roll back the decision at the earliest," he said.

During last Teej, around 25 kilograms of gold were traded every day, and Negosida expects daily demand of the yellow metal to soar up to 35 kilograms during this Teej, which is two weeks away, Shakya added. But with the scarcity already in the local market, the price of the precious metal is spiralling.

Today gold was traded at Rs 36,500 per tola (11.664 gram) -- Rs 50 more than yesterday. Yesterday it had jumped by Rs 510 more than a day ago and was traded at Rs 36,450 per tola.

Though the price has been soaring since the start of the week due to the international market, yesterday's and today's price hikes are attributed simply to the shortage of gold in the domestic market. This week alone the gold price rose by Rs 750 compared to Sunday's opening price of Rs 35,750 per tola.

There is growing suspicion over increased gold imports. "The demand is picking up every year. Where is it being consumed?" the central bank governor said.

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