Posts Tagged ‘jewellery’

SILVER……GROWING AVENUE OF INVESTMENT

Recently silver, known as poor’s gold, is gaining not only against the dollar and other old world currencies but also outperforming gold. Due to high prices gold is loosing its own attraction from common man and importance of silver as precious metals is gaining momentum. The declining trend of gold/silver ratio indicate that silver become better destination for investment. Like gold, silver has retained rally momentum due to recent poor economic data that has caused investors to purchase Silver as a “safe haven” alternative investment. The pickup of silver industrial demand due to the emergence and growth of a number of new end uses, and continued strong investment demand is pushing silver prices sharply higher.

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Like all metals, London Bullion Market is the global hub for silver trading, while the New York’s Comex Futures dominate the solver fund activity. The world’s largest silver backed exchange-traded fund, the i Shares Silver Trust, said its holdings rose to 9,280.40 tonnes by Sept. 1 from 9,151.03 tonnes on August 5.

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Global demand- supply of silver According to World Silver Survey 2010 , global silver mine production rose last year, by almost 4%, its seventh straight annual increase to reach a record high of 22,072 ton.Peru is the world’s largest silver producing country followed by Mexico, China, Australia and Bolivia. GFMS is forecasting a further mine production rise of 3 per cent this year.

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According to GFMS, In the last ten years, the world jewellery demand was down 8 per cent and silverware as much as 38 per cent. And because of technology changes silver use in photography sector had suffered a major fall of 62 per cent. But as strengthening of belief in silver as a precious metal is the 145 per cent demand gain since 2000. The industrial application of silver is almost 48 per cent of total silver use.

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Indian demand- supply of silver Though India is generally believed to have a great appetite for gold, Indians also love to possess silver in their homes for jewellery. India is voluminous importer of silver. Of the 4,000 tonnes that India used to import annually, around 2,600 tonnes was used to make jewellery and ornaments. MMTC is the largest importer of gold in the country. The firm’s silver imports fell by more than 44% in the fiscal year to end March 2010, as high prices dented demand. More than 60% of India’s silver demand comes from farmers.

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Last year silver demand dipped because the country experienced one of the worst monsoon seasons in over four decades. However, with much better monsoon this year, the situation is set to reverse and India’s appetite for silver has also been boosted because gold has become too expensive at current prices. According to official data, India’s silver imports in the first six months of 2010 are up 579%.

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From April this year, India has also started hallmarking of the white precious metal to ensure purity. With increasing amounts of impurities in jewellery being sold across the country, public sector trading major, Minerals and Metals Trading Corporation (MMTC) is banking on its branded jewellery, silverware gift items and coins to push up its market share.

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Like gold, silver has not enjoyed equal recognition from hedge funds, pension and retirement funds, insurance companies, and sovereign wealth funds– but this is likely to change as fund managers recognize silver’s relative value and simply wish to diversify their precious metals exposure.

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Outlook

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Good monsoon, high gold prices and global trends may help silver outperform the yellow metal in India. Better harvesting will underpin demand from the farming community this year. Since gold prices are trading over `19,000 per 10 gm, many rural families are now switching to silver.The weakening of rupee also supporting the prices.

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More and more people here are using silver as a speculative commodity play as many others are looking at it as a safe haven asset. The overall market sentiment is bullish for silver. So it could be a more decisive silver price breakout before the year ends to touch the level of `33500.

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Gifts Will Be Taxed as Income From October 1 :)

Receipt of gifts after September 30 will be treated as your taxable income !

Receipt of gifts after September 30 will be treated as your taxable income !

If your friend had promised to gift you a diamond studded gold watch worth Rs 3 lakh, better it would have been that you should have encashed that promise in September itself.

The receipt of gifts or say above mentioned gift after September 30 will be treated as your taxable income from now onwards, attracting a straight income-tax of Rs 92,700, if you fall in the top tax-bracket of 30.9%.

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Prior to this, only gifts of any sum of money (and not gifts in kind) in excess of the prescribed limit of Rs 50,000 were taxed as income in the hands of the recipient individual or HUF,
subject to specified exceptions : such as receipts from relatives or on the occasion of marriage or under a will.

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EIGHT SPECIFIED GIFTS IN KIND IN TAX TRAP

The changes come as per the new provisions of Section 56(2)(vii) introduced by the Finance Act, 2009, and slated to be effective from 1st October, 2009.

Eight specified properties, including land and building, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures and any work of art, received by an individual or HUF, either by way of gift or for a purchase consideration that is treated by the assessing officer as inadequate, then the market value of such gift or the differential value of such purchase,(if exceeding Rs 50,000), will be taxed as income from other sources.

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Interestingly, with only eight properties specified in the hit list, a host of other valuables such as motor cars, electronics, furniture, air tickets etc. have still been kept out of the tax purview and you can thus enjoy the luxury of receiving gifts of any of these even beyond October, 2009.

Fortunately, the specified exceptions, such as receipts from relatives or on the occasion of marriage or under a will, as currently applicable to cash gifts, will continue to apply in case of gifts in kind also.

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However, the definition of ‘relative’ will apply not as understood in the common parlance, but as prescribed in Section 56.

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