Fight over gold share splits bullion traders

KATHMANDU, JAN 11 -

The domestic bullion traders have split into two groups, with one led by Nepal Gold and Silver Dealers Association (Negosida), still the most influential player in the local bullion market, a group comprising three associations of gems, jewellery traders and artisans heading the other.

Negosida is scheduled to announce a separate federation—the umbrella organisation of bullion traders —at its 21st annual general meeting on Friday. Nepal Gems and Jewellery Association (Negja), Nepal Gold and Silver Artist Association (Negosaa) and Nepal Gold-Silver Craft Business Association had jointly decided last month to form their federation.

Bullion traders said the government’s quantitative restriction on gold import had fractured the association. “Inadequate supply is one of the reasons behind the tussle among the bullion dealers’ associations,” said Tej Ratna Shakya, the president of Negosida.

The three disgruntled associations have reservations against Negosida laying claim to majority of gold quota. The government currently allows only commercial banks to import 15kg of gold per day to be sold among the local bullion dealers. Of the total daily quota, 9 kg is set aside for Bagmati zone and the rest for distribution elsewhere in the country. In Bagmati, Negosida gets 50 percent, Negja 30 percent, and Negosaa and the Federation of Handicraft Associations Nepal each get 10 percent. With the big rise in the import of the precious yellow metal during the fiscal year 2009-10, the government had imposed ceiling on gold imports allowing only selected commercial banks.

The three associations blamed the government move had hit their business, saying that limited supply had created shortage giving rise to gold smuggling and disparities between the dealers’ association.

Negosida sets daily price of the bullion in the local market. “We are still open to include the three associations in our federation,” said Negosida President Shakya. But he said the two sides had failed to agree on a single federation despite several rounds of talks.

The domestic market consumes 30-35 kg of gold per day, claim the bullion traders . Manik Ratna Shakya, Negosida general secretary said the local market would continue facing problems as long as there is a wide gap between demand and supply. “The government should increase the quota or allow traders to import gold under open general license as in the past,” he added.

Source: The Kathmandu Post