Posted at 11:31 AM , on July 28, 2015
The price of gold has been on a virtual downtrend since September 2011. Of course, we are referring to gold in dollar terms. From a high of $1900 / troy oz it has fallen closer to $1100 / troy oz in a span of 4 years. There are a variety of reasons attributed for the end of gold as an alternate currency. Firstly, the dollar has been on a constant tear and typically the US dollar has been negatively correlated to the price of gold. Secondly, with the entry of ETFs large global ETFs like SPDR have started holding over 1300 tonnes of gold to back their gold ETF units. One needs to remember that SPDR today is the 6th largest gold holder. This investment demand has created volatility in the price of gold. Continue reading
Posted at 5:31 PM , on June 2, 2015
Why India needs to take its gold stash more seriously!
The recently announced Gold Monetization Scheme announced by the government is a small step in the right direction. The call of the moment is a lot more aggression. Let us understand why India needs to take its gold stash much more seriously.
How big is the stash…?
There are no confirmed reports on the gold stash of Indian households. But conservative estimates put the number at around 22,000 tons of gold. Of course, most of this gold is largely heterogeneous in terms of form, quality, purity and value. But, that is off the point. The reality is that Indian households are sitting on a huge stash and they are normally unable and unwilling to effectively unlock its value. Continue reading
Posted at 1:39 PM , on May 28, 2015
How effective will this scheme eventually be?
The draft Gold Monetization Scheme has been put up by the Ministry of Finance for public comments. Principally, it is different from the 1999 scheme in 2 ways. Firstly, the minimum entry point has been lowered from 500 gm to 30 gm. Second, the setting of interest rates has been left to the discretion of the banks.
Costs are still high
That was the bane of the old gold monetization scheme and that problem continues. If you add up the cost of hallmarking, assaying, purifying, storage it adds up to nearly Rs.1400-1500. That means even if you deposit 60 grams of gold, your first year interest will be eaten away by costs. That could be a major disappointment. Consequently, the reduction of entry level to 30 grams may not really add any practical value. Continue reading
Posted at 12:41 PM , on April 20, 2015
by- Jayant Manglik, President of Retail Distribution at Religare Securities Limited
Once again, the festival of Akshaya Tritiya is here and is preceded by the inevitable rush of advertisements for buying gold and gold jewellery. A number of important events in mythology took place on the day of Akshaya Tritiya and, thus, this day is especially holy for Hindus and Jains. Since the word Akshaya means `that which never diminishes’, anything acquired on this day is believed to bring success and good luck. The day is considered favourable for starting new projects. It is also considered auspicious for buying gold. Continue reading