A lot of eyes in the global gold sector on India, over the last few months, were looking to see what effect radical new plans in the bullion business here might have on demand in the world’s top-consuming nation.
The biggest change going in India’s gold market has been the so-called “gold monetization scheme” where the government has been encouraging private citizens to deposit bullion with central banks, in interest-bearing accounts.
The idea for the government is to then loan out the gold to jewellers and other end users. Thus reducing India’s overall gold import demand.
But logical or not, it appears that India’s gold holders have made up their minds on the gold scheme.
And they’re saying no.
That’s judging from reports from India’s Economic Affairs Secretary, Shaktikanta Das who said on social media on Saturday that the gold monetization scheme has attracted 900 kg of gold to date.
That comes with the scheme having been in effect since November 5 — suggesting that the government is collecting less than 400 kg (0.4 tonnes) per month.
That would imply the scheme could attract something in the order of 5 tonnes of gold yearly, at current deposit rates. Equating to just 0.5% of India’s estimated gold demand of approximately 1,000 tonnes per year.
Such numbers are likely not enough to move the dial on local or international prices. Suggesting this potential threat to the global gold market may pass with little effect.
India’s government is trying to tweak the scheme to make it more attractive and accessible to investors. Watch to see if the deposit numbers depart from the current trend — a big increase will be needed to make a difference.
Here’s to plunking it down,
The information provided in this newsletter is based on the independent research of Dave Forest and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained in this newsletter is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided in this newsletter and any other materials which are referenced herein are provided “as is” without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions. Dave Forest does not make any representations about the suitability of the information delivered in this newsletter or any other materials that are referenced herein for any purpose whatsoever. The information contained in this newsletter does not constitute investment advice and Dave Forest is not registered with any securities regulatory authority to provide investment advice. Readers are cautioned to consult with a qualified registered securities adviser prior to making any investment decisions. The information contained in this newsletter has not been reviewed or authorized by any of the companies mentioned herein.
To subscribe to Pierce Points please click here: www.piercepoints.com
Copyright © 2016 Pierce Points