It could also have been a thousand years old, which is nearly how long gold has been traded in the city of `Dilli.' Sir George Watt writes in the `Indian Arts at Delhi' that the gold and silver industry in the city produced three lakh miles of gold and silver wires per year at one time. Delhi remained a major hub for gold and silver thread-work and lametta for nearly five centuries before World War I.

The advent of imitation lametta after the War changed some things and the end of the gold standard, some others. Even so, the Delhi Bullion Merchants' Association general secretary Shri Krishan Goyal, claims that the city still rode the crest of the gold trade at home. On any given day, the nearly thousand members of the merchants association trade in 20,000 tolas (250 kg) of gold, which is twice the volume of transactions in the bullion markets of Mumbai and Calcutta, he said. If demand could dictate prices, Delhi would have held the lease of the world trade in bullion, says Goyal, but alas, that was not to be. Supplies have kept the world bullion market see-sawing all through last year, after the Bank of England decided to reduce its gold reserves to 300 tonnes from 715 tonnes.

The three tranches of gold auctions by the British central bank in 1999 pushed bullion prices down twice and pushed it up once on speculative demand. The bullion markets in Mumbai, Chennai, Calcutta and Delhi took the backlash of the bear wave in the yellow metal market. London Bullion Market prices nosedived to a 20-year-low after the Bank of England auctioned 25 tonnes of gold in July 1999.

The London bullion price dipped to $261.20 per troy ounce. By July 11 gold prices at home had crashed to Rs 3,995 per 10 grams. The September sales by the Bank of England pushed up gold prices to $340 a troy ounce on speculative demand, only to bring them down again in November. The bank sold its gold at $293 an ounce then and bullion prices nosedived once more. In India, gold prices dropped to Rs 4,610 per 10 grams after a brief splutter in earlier months. ``At one time,'' sighed Goyal, festivals and marriage seasons dictated gold prices, but now home market rates were tied firmly to the apron strings of international price trends.

Last week bullion prices in the four metropolises were in the range of Rs 4,475 per 10 grams and Rs 4,410 per 10 grams. Prices in the London bullion market hovered in the range of $309.50 an ounce and $279.75 an ounce, a long haul since the November lows. These volatile times demanded that traders be given the sanctity of a bullion exchange, said the leader of the Delhi bullion merchants. Other merchants added that repeated petitions had been made to the Union ministers of finance for restoration of the bullion exchange, closed in 1963.

``We have been demanding forward trading since 1980,'' some said, adding that traders no longer had any risk covers. ``We have been asking for a gold house too,'' Goyal said. The Gold House, he said, could be modelled on the lines of the World Gold Council. It could be a joint forum of merchants and government representatives, to monitor, price, supplies, demand and other concerns of the trade.

``We want to re-open the exchange again,'' he said simply, adding, ``the exchange could help us cover risks.'' The bullion exchange was born around the time of Independece. The Bullion Merchants' Association came afterwards in 1951. ``The Punjab Jewellers'' on Chandni Chowk, who are among the older members of the association, set up shop in 1936 after crossing the border from what is now Pakistan.

The bullion exchange downed shutters less than two decades after it was opened, with the advent of the Gold Control Act. Gold was decontrolled again on February 19, 1990, bringing in a new sparkle into the bullion trade in the city. The revival of the bullion exchange could turn that sparkle into a glow, if you believe the bullion merchants of the largest gold trading mart in the country.

Traders bet on lasting glitter
If you are planning to defer your gold purchases for a few months in the hope that prices would come down due to the general recession in trade, gold traders advise you to think again. Although gold and silver prices have not moved up in the last two months, Delhi traders rule out a drop in prices because a number of international gold exhibitions are lined up in the last quarter of the year which is expected to keep prices stable.

Speaking to The Financial Express

, the Delhi Bullion Merchants' Association general secretary SK Goyal said that a large number of buyers and sellers participate in the international exhibitions and a lot of business takes place there. "This acts as a major boost for trade and firms up prices." The exhibition season will open with the first international gold exhibition in Italy in September. It will be followed by exhibitions in the US and several other countries in Europe. Jain said that festivals and marriages no longer determined the prices of gold. "Earlier, prices used to shoot up in the northern region during the Teej festival. Festivals like Dussehra and Diwali also had a spiralling effect on prices. So did the marriage season. But things have changed now."

He added that since domestic prices are now linked to the international prices, they move according to the global trends. Besides, as a member of the bullion merchants' association, Himanshu, puts it, "Nowadays, people don't buy much gold during marriages because it is no longer considered to be a big asset. Instead, people like to invest in consumer durables and electronic items." Despite this, Delhi remains the hub of gold trade and boasts of being the city where the highest gold sales take place in the world. According to Goyal, on an average around 250 kg of gold is sold in Delhi everyday.

-- Amiti Sen