You may soon be able to sell your ancestral gold over a BSE-like platform, as the World Gold Council plans to form a committee to help set up India’s first physical gold exchange.
You may soon be able to sell your ancestral gold over a BSE-like platform, as the World Gold Council plans to form a committee to help set up India’s first physical gold exchange. Reuters reported an official of World Gold Council saying that the committee will help set up the gold exchange within 12 to 18 months. “We will be taking lead in forming the committee, which will have all the stakeholders,” Reuters reported Somasundaram PR, managing director of the WGCs Indian operations as saying.
A World Gold Council report which highlights the need for setting up the exchange in India, says that the move will enable retail investors to bring their physical gold to formal financial channels, thus giving them an opportunity to monetise it. Currently the households have over ~22,500 tonnes of gold, says the report. “While banks’ widespread network and trust factor are essential to facilitate retail investors to bring their gold to formal financial channels, the spot exchange can be a key enabler for the success of these efforts,” observed the report. A physical exchange would enable jewellers, retailers, refiners and banks to trade over a regulated platform, the WGC report said.
The effort of to monetise gold is part of India’s plan to curb gold imports, thereby improve the widening current account deficit. Further, it will also enable India to achieve the status of being a global hub of gold trading.
Underscoring India’s tryst with the yellow metal, WGC says that despite its significant size and important global position, the Indian gold market, with annual demand to the tune of 800-900 tonnes, second only to China, is unable to realise its potential due to multiple challenges such as lack of quality assurance, weak price transparency and fragmented liquidity and regulatory issues.
“There is a pressing need to reform the gold trading market in India, and a spot exchange, encompassing a broad ecosystem for efficient physical trading of gold, could play a significant role in reforming the gold market in India”, said the report.