Gold imports to India, one of the largest consumers and importers of the yellow metal in the world, could collapse to the lowest in the decade if gold prices continue to rise in the coming months, bullion dealers said. Buying of gold jewellery has fallen sharply in January leading to a slump in the yellow metal's imports. According to the Bombay Bullion Association figures, gold imports dipped to 1.8 tons in January 2009 against the 18 tons in the same period last year. In 2008, India's gold imports dipped by 45 percent to touch 450 tons. " There has been more than 90% plunge in gold imports in January. The trend is continuing for February also. If this lowest level of gold intake continues in India, 2009 will be the worst year in this decade as far as gold imports are concerned," Ashish Roy, a bullion dealer in Zaveri Bazaar, Bombay's bustling gold market, told Commodity Online. In the last eight years from 2000, gold imports to India every year have been between 400- 800 tons. But Roy says he fears that gold imports this year could collapse to 100 tons, if the current trend continues. " It will not be a surprise if gold imports fall to an all- time low of 100 tons or below in 2009," he said. High prices, global economic meltdown and financial crunch among investors and bullion dealers led to low demand for gold in India, where yellow metal is considered the best safe haven investment and people buy gold for weddings and other ceremonies. According to Suresh Hundia, President, Bombay Bullion Association, gold sales and demand have dropped to negligible levels because of high prices. " Gold and jewellery sector is reeling under a crisis because of high prices and retrenchments across sectors," he said. Gold prices which in December was from Rs 13,505 for ten grams moved to an all- time high of Rs 14,350 per ten grams last week. Analysts have predicted that gold prices could zoom to Rs 16,000 per ten grams by April this year. Inspite of the fall in demand, gold prices have moved up as investors found a haven in the yellow metal on fear of deflation. But even though investment in gold looks attractive, many investors have been struggling for survival after they lost money in commodities and equity markets. Harish Galipalli, Head of Research, Karvy Commodities, says gold prices could zoom to higher levels because of the dollar- euro movements on weak economic fundamentals. " Gold prices are only going to go up in future," he said. The World Gold Council, however, has predicted there will be a modest gain in gold purchases in India during the summer wedding season and the Hindu religious festival of Akshaya Tritiya. " There will be a modest growth of 10- 15 per cent in the Indian domestic jewellery business," said K Shivram, Vice- President, World Gold Council. Shivram says gold sales will pick up in April- May- June after the dull season of December and January. One of the main reasons that is cited for the plunging gold imports is that Indian banks have a lot of carryover gold stocks from November and December resulting in lower imports. Higher prices have also been the culprit for decreasing gold imports. India gold imports may plunge to 100 tons in 2009 Botswana's diamond production declined to 32.6 million carats in 2008 compared to 33.8 million carats in 2007, shrinking 3.5 percent. Sales, however, fell 17 percent to an estimated 28.9 million carats, according to Minister of Finance and Development Planning Baledzi Gaolathe. During the annual budget speech to the National Assembly on Monday, Gaolathe warned that the fall in diamond sales is the main risk to the Botswana economy. According to Gaolathe, the country's diamond sales started to fall significantly in November 2008, leading to the 17 percent year- over- year decline in volume. " The diamond market performed exceptionally well during the first three quarters of 2008 which saw prices increasing by about 20 percent. However, the ensuing global financial crisis led to a sharp decline in commodity prices during the last quarter of 2008," Gaolathe told the Assembly. Despite the downturn, revenues from diamonds and other minerals rose about 13 percent to 1.44 billion pula ($ 181.3 million), attributed mostly to a 9 percent increase in diamond prices. Botswana benefits economically from diamonds through mineral taxes, royalty payments and dividends. Gaolathe expects diamond prices to decline 15 percent and production to contract by 35 percent in 2009, leading to a 50 percent decline in diamond revenues. Botswana Expects a 50% Decline in 2009 Diamond Revenues Page 12 Brink's Global News | News

Peru, a leading global metals producer, said on Thursday that output for key metals rose in 2008 from 2007, despite softer global prices for minerals. The Andean country's mining and energy ministry said production surged to record highs for copper, zinc, silver and gold. Peru is the world's top producer of silver, No. 2 in copper and zinc, and often ranks fifth in gold output. For much of 2008, metals prices were sky- high, but they crashed near the middle of last year as the global economic crisis dragged down prices for most commodities. In December, Peru's copper, zinc and silver outputs rose, while gold production fell from the same month in 2007. Mining exports account for more than half of Peru's total exports and are the government's biggest source of revenue. Gold jewelry fabrication fell 11% in 2008. World jewelry fabrication fell by 11 percent ( 262 tons) in 2008, which took the total to its lowest level since 1989, according to a report released Thursday. Record and volatile gold prices, combined with a deteriorating economic backdrop, were the key reasons behind the poor performance. However, as Gold Survey 2008 – Update 2 reports, there was some brief respite in the third quarter, when lower gold prices, in several key currencies, produced a 30 percent rise in jewelry fabrication, compared with the April to June period. The report by precious metals consultant GFMS, based in London, offers estimates on developments in global gold supply and demand for the full year 2008, as well as forecasts covering the first half of 2009. When excluding scrap, a trend in jewelry fabrication, demand last year fell by a more severe 20 percent, or 306 tons, compared with 2007, to its lowest level since 1988, according to the report. Jewelry fabrication ( including scrap) in just four countries, India, Italy, Turkey, and the United States, accounted for 69 percent of the gross decline in 2008, the London- based firm said in its report. The largest traditionally price-sensitive market, India, produced the greatest fall last year. This was almost entirely a product of high and volatile local prices, which also accounted for the decline seen in Turkey. These factors also accounted for much of the weakness in several key Western markets. In particular, the sharp drop in U. S. jewelry consumption, which was also affected by the domestic economic slowdown, not only affected the country's jewelry manufacturing, but was an important reason for the fall in Italian offtake, which is estimated to have dropped by around 18 percent, according to the report. The one significant positive note was the growth in Chinese fabrication, which grew for the sixth year in succession, in the process setting a new record in excess of 300 tons. Looking to the first six months of this year, GFMS is forecasting an 11 percent year- over-year fall in jewelry fabrication, which is actually positive compared to a particularly weak first half 2008. " Given our expectation of higher prices and a poor economic outlook, it is not surprising that we are forecasting lower jewelry fabrication in every region in the first half of this year," said Philip Klapwijk, GFMS' executive chairman. " In fact, if we take the comparison back further, and look at the first half of 2007, just two years ago, jewelry fabrication then was 400 tons higher than we are predicting for the first six months of 2009." Peru's key metals production rises in 2008 As diamond traders in Mumbai and Surat are struggling to keep their business afloat, the situation in Antwerp and Russia is not different. Antwerp, world headquarters of diamond rough trade, is feeling the pinch now with demand falling to unimaginable levels. Russia's diamond trade is also suffering huge losses and there are no buyers for diamonds now. It is a clear hint that during the time of crisis people have decided to say good bye to luxuries. But, gold has still managed to stay afloat because of its investment safe haven tag. According to media reports, Russia is registering the biggest fall in diamond production in the world. Moreover, several big diamond majors are also slashing production. The trigger for this decision was 40- per cent decline in De Beers' output. In Russia, following the global meltdown, gold and cut diamond sales dropped by 40 per cent. According to reports quoting Antwerp World Diamond Centre, an organization representing the Belgian diamond industry, the cut in financing would lead to the world's top miners, De Beers and Russia's Alrosa, slashing production of rough diamonds by up to 40%. Banks usually finance two parts of a diamond business balance sheet, the receivables and the purchases — in these present circumstances, it is extremely difficult for the banks to finance both. Antwerp handles around 80% of the world's rough diamonds and half of all polished diamonds each year. ABN Amro, the world's biggest diamond financier, was aquired by the Belgian government in October after its parent company Fortis Bank had to be bailed out. Another big diamond financier, Antwerp Diamond Bank, said last month the company was already seeing a recessionary impact on consumer spending and the capacity to service debt could come under strain. De Beers, which accounts for about 40% of global rough diamond supply and is 45% owned by mining group Anglo American, said last month it will cut output at two of its new Canadian mines by 10- 20 percent. Gold, diamond sales crash by 40% in Russia April 2009 | The Brink's Journal | Page 13 Brink's Global News | News