India Should Monetise 20,000 Metric Tonnes Of Gold

House · Jun 7, 2013

Good luck!

India should monetise their huge gold stockpiles of over 20,000 metric tonnes according to the World Gold Council (WGC) as reported by Bloomberg this morning (Which I can't find for some reason).

"In the long term gold could be monetized as a financial asset," Aram Shishmanian, the CEO of the WGC said in India overnight.

The World Gold Council has approached the Reserve Bank of India (RBI) to work with it so that bullion could be used as a financial asset, rather than just a physical asset.

Exactly how the considerable store of wealth that is the gold of Indian people could be monetised was not said.

The move comes close on the heels of a desperate series of steps taken by the Indian government as well as the central bank, aimed at reining in gold imports which is contributing to the rising current account deficit.

The World Gold Council said that they recognise the need for the recent government measures to contain gold imports, but warned that if such a strategy remains in place for long, it may lead to proliferation of the grey market, like it was before India liberalized gold imports about 15 years ago.

Indeed, there already reports of gold being traded in the black market in India.

Despite many regressive steps by the government and the RBI, there is no abatement in Indians buying gold in order to protect their wealth. The short panacea of increasing duties has led to short term falls in demand but demand has remained robust and is likely to do so as long as inflation remains stubbornly high.

People have made very steady returns on gold in the past 12 years compared to most other asset classes. People preferring to own gold over paper currencies have protected their savings from currency devaluations in recent years and will do so in the coming years.

Therefore diversification and ownership of gold should be encouraged rather than discouraged.

People who own gold will be seen as prudent in time ... much more prudent than those who discourage gold ownership or those who do not own any gold whatsoever.
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India Should Monetise 20,000 Metric Tonnes Of Gold

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India Should Monetise 20,000 Metric Tonnes Of Gold

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