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Gold Spot Exchange will enable efficient recycling of gold

Haresh Acharya from Parker Bullion

During IIGC 2019, Bullion Bulletin team met Mr. Haresh Acharya from Parker Bullion and had a conversation with him on the current market situation in India and so on.. Excerpts of the interview below..

What is the situation right now in the India Bullion Industry?

Industry is struggling right now. On one hand, Gold price is going up. On the other hand, there are signs of slowing down of economic activity. As a result, purchasing power of consumer is also becoming less. Jewellery purchase has also slowed down in the last one month. There is lack of economical funding in the market. More than the increase in custom duty, it is the absence of any reform-oriented announcements in the budget that has disappointed the market.

What is the discount now in your area?

Since the Gold price has jumped from 1280 US $ to 1460 US $ in the last 45 days, the discounts have also gone up to around 28 - 32 US $ per troy ounce throughout the India.

World Gold Council launched its blue print on the Gold Spot Exchange, a while ago at IIGC 2019. In your opinion, how would gold spot exchange impact the industry?

Gold spot exchange is definitely a good thing for the Industry, as throughout India, we will then have ‘one India one price’. BIS approved refiners can work on mobilizing local scrap, refine and supply the refined gold to exchange. Thus, churning of local gold would start. I think spot gold exchange is definitely a great hope for industry and a much-needed one.

How will bullion dealing be one to two years down the line?

According to WGC report, India has around 25,000 tons of Gold with private (households) which is inherited. If government can revamp the existing Gold deposit scheme or gold monetization schemes and make them attractive, then the household Gold can come out. Besides, we have a lot of temple Gold which can be tapped too. After launch of spot gold exchange, the Government should initiate revamping of the existing schemes and route the gold thus mobilized through the exchange.

With the increase in duty of 12.5% how are customers behaving? Do they even know about it?

With the economy slowing, the government revenue is slowing. As gold is considered a luxury item, the government has thought it appropriate to raise the custom duty on gold. It is a revenue measure, in my opinion. We support the move in the current situation. However, government should also push the gold sector policy reform agenda, so that export opportunities are captured and employment opportunities are intact.

In your opinion is the demand of Gold increasing?

Demand of Gold world-wide is increasing. If we talk about India, in the short term, due to economic crisis, there is a slump in physical demand. However, we see good volume growth in gold derivative markets. Unlike equity markets, the return on gold has for most periods been positive. So gold is in safe zone.

What is your thought on Digital Gold?

Digital Gold in India is still very small- around 1.5 to 2 tons. Still our rural class buys more physical gold. Digital gold has attracted the urban buyers of Gold but has not made significant inroads in to rural India. Digital gold will take time to grow in India. Spot gold exchange may also support the growth of digital gold.

Anything you would like to say to the Industry?

Bullion dealers are having tough time now. The present government is keen on reforming the gold markets and making it at par with the best in the world. Speedy implementation of gold policy reforms would greatly boost the industry, protect and grow employment, facilitate technology upgradation and also increase exports over the medium to long term. Of course, reforms would protect consumer interest and ensure quality.  

 

Disclaimer: Views are personal and not the views of the publisher.