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Gold Market Is Changing Worldwide

CA Surendra Mehta, Secretary, IBJA

Crypto currency, bit coin in particular, has become a headache for most governments as the currency is far less stable than investment in gold.  The bit coin value jumped 8 times to nearly $8000 in less than 10 months in 2017. This could potentially devolve into a horror show for investor and for the world market. To tackle the crypto currency, a London-based fintech start-up, has come out with a solution – a staggered launch of a multi-currency account app called GLINT that does indeed let you store your money in gold and convert back to currency at any point of time and vice versa.

The Glint card itself is MasterCard (do you mean MasterCard has launched it or is it similar to MasterCard?) and hence widely accepted. Once you’ve signed up with proper KYC including passing anti money laundering checks, you can top up your account either in currency or convert it to gold. Then when you pay for the things with glint card you have option to pay either in currency or gold. Glint card does the conversion including effectively selling the required gold to cover the cost of purchase. What it means that you can upload your wallet in currency and request for conversion of gold and pay either in currency or gold or both provided it is acceptable to buyer. Physical gold holdings are legally allocated to each investor and held in bank vault for an annual storage fees.

However, this does not seem to be as simple as looks for a country like India where the law needs to be changed to permit exchange of gold as an alternate to currency. Currently, through some digital wallets, you can buy gold but you cannot utilize this gold for payment against your purchase. Such a measure by Indian government will make our money reliable and independent and give control in the way an investor wants to store, spend, exchange and transfer money and gold. Gold historically has been a better storage of value than any other created currency like bit coin. Various direct tax laws in India do not permit exchange of gold against currency or vice versa, more particularly when loans on deposits are taken or repaid. Such a law will need a revision in the era of digital payment mechanism. Many jeweller in India are also found to be accepting gold as deposit in violation of Section 269SS of the Income tax Act.  Such digital mechanism of transfer of gold directly for loan or deposit can be useful as Indian household reportedly have gold deposits of more than 25000 tonnes. However, to bring household gold back to system, BIS immediately needs to adopt India Good delivery standard prepared by Indian Bullion & Jeweller Association (IBJA) with other stakeholder. One may say that world has started adopting a barter system once again. Such re introduction of gold as money in international market allowing people to store gold, send it as gifts and spend it with counterparties by grams, or fractions thereof can change the price behaviour of gold . It must be understood that unlike currency, gold can’t be wiped out or devalued. However, such a measure will definitely bring more transparency in terms of buying and selling of gold in India but people with black money in cash will never adapt to such mechanism.

The Indian government very recently announced that it has not legitimised any crypto currency. The government of India stands with the RBI statement on crypto currency dated 24th December, 2013, however, Nasdaq has recently announced that separate indices will be launched for crypto currency. It is very surprising is to why Nasdaq is supporting crypto currency. Excitement about future is block chain technology, weakness in US Dollar, acceptance of crypto currency in world and momentum in digital currency are few reasons for Nasdaq to formally accept crypto currency. However, it will be difficult for Indian government to legally accept any crypto currency which is privately circulated and hence it is advisable that one deal in the currency which is backed by fundamentals and assured by government. At least for a country like India gold is always seen as an alternative currency and hence, it is recommended that it’s now time to store your money in gold.

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