Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Regulatory Changes in India Could Boost Gold Market

  by    0   0

Last week, there was some significant news out of India that could further boost the country’s gold market.

The Indian government will now allow banks to engage in gold bullion business – including holding, buying, selling, hedging and leveraging the yellow metal. Under current rules, banks can only serve as a consignment or channeling agent in the import of gold bullion for jeweler and exporters.

The loosening of regulations could increase a gold market that already ranks as the second-largest in the world behind only China.

World Gold Council India managing director PR Somasundaram said the move would almost certainly boost the gold trade in India.

Allowing bullion banking will be a main step towards developing gold infrastructure in India and establishing gold as an asset class. Once bullion banking is allowed, banks can handle bullion risk, hold gold account, hedge and take active part in the proposed gold spot exchange.”

Somasundaram said the regulation change would augment a proposed Indian spot-gold exchange and support better price discovery in the Indian market. Other analysts said it would increase the availability of gold.

Indians traditionally have a strong affinity for gold. While you may think of gold as a luxury item, many Indians view it as a necessity. In the Asian nation, buying gold is not just for the rich. In fact, a recent survey shows that possessing the yellow metal is a universal phenomenon across all income classes in India.

The yellow metal is interwoven into the country’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system. This explains why even the poor buy gold in India.

One in every two households in India purchased gold within the last five years. Overall, 87% of households in the country own some amount of the yellow metal. Even households at the lowest income levels in India own some gold. According to the survey, more than 75% of families in the bottom 10% had managed to buy gold.

If anything, these numbers likely understate gold ownership – especially among the poor. An official involved in the survey who did not want to be identified told LiveMint that survey respondents are often hesitant to admit to purchasing gold. This comes as no surprise considering gold is a major part of India’s vast underground economy.

Indian gold demand already has a significant impact on the global gold market. As banks take advantage of regulatory changes and enter the gold business, it could boost demand for the yellow metal in India even higher.

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Americans Pile on More Debt; Outstanding Consumer Credit Approaching $4 Trillion

Americans continue to bury themselves in debt. US consumer credit rose by the largest amount in 11 months in October, as Americans piled on another $25.4 billion in debt, according to the latest consumer credit report by the Federal Reserve. Total consumer indebtedness is rapidly approaching $4 trillion, with Americans currently $3.96 trillion in the […]

READ MORE →

What Do These Jobs Numbers Really Tell Us Anyway?

Circling jobs in newspaper classifiedsNovember’s jobs numbers came out Friday weaker than expected. Trump’s twitter feed was strangely silent on the jobs report. Generally, he likes to tout unemployment as an accomplishment, even though he poo-pooed the same numbers when he was campaigning against Obama. As Peter Schiff pointed out in his most recent podcast, the official numbers significantly understate […]

READ MORE →

Poll Reveals Foreign Currency Traders Have Gone Bearish on the Dollar

A strong dollar in recent months has created the biggest headwinds for gold. But will dollar strength continue? Most foreign currency traders recently polled by Reuters don’t think so. Reuters surveyed more than 60 currency analysts and the consensus was that the dollar would be weaker against major currencies in a year. The exchange strategists say slowing economic […]

READ MORE →

Gold Flows into ETFs for Second Straight Month; Global Holdings Up on the Year

Gold holdings in gold-backed ETFs rose for the second straight month and turned positive for the year in November. According to a report by the World Gold Council, 21.2 tons of gold, valued at about $804 million, flowed into ETFs last month. Total global holding rose to 2,365 tons.  Related

READ MORE →

Demand for Physical Gold Expected to Be Strong Moving into 2019

World Gold Council chief market strategist John Reade projects healthy demand for physical gold in 2019 and said any kind of economic slowdown could boost demand — and the price — significantly. Related

READ MORE →

Comments are closed.

Call Now