Mumbai: The Free Press Journal (FPJ) in association with Bombay Stock Exchange (BSE) organised a conference titled ‘Gold and its increasing allure for India and the world’ on November 5, 2019 at BSE convention hall. The discussion covered varied topics — all related to gold— from policy issues to the need for the industry to regulate itself.
The event was divided into two panel discussions namely ‘Markets and Investments’; and ‘Evaluating gold policies’. The panel on Markets and Investments had (in alphabetical order) Ketan Kothari, Director, Augmont; Ranjit Singh, Products and Business Development, BSE; Keyur Shah, CEO-Precious Metals Business, Muthoot Pappachan Group; and Kunal Shah, Head of Research, Nirmal Bang Commodities.
The panel on gold policy had (once again in alphabetical order) Sanjiv Arole, Gold columnist; Surendra Mehta, National Secretary, India Bullion & Jewellers' Association (IBJA); Sudheesh Nambiath, Head, India Gold Policy Centre (IGPC) of the Indian Institute of Management- Ahmedabad (IIM-A); Somasundaram PR, MD, World Gold Council India’ Madan Sabnavis, Chief Economist, CARE Ratings Ltd; Sabyasachi Ray, ED, GJEPC; and Bhargava Vaidya, Bullion Expert.
While the demand in India for gold has been subdued this year, expect gold prices to rise further, stated Kunal Shah. He added, “There is no way you can quantify that gold will go to this level. But a 10 per cent CAGR is on the cards. I am constructively bullish about this.”
Madan Sabnavis, Chief Economist, CARE Ratings Ltd stated there is demand for gold in India. “It is just that people are following wait-and-watch approach because the prices surged some time ago.”
While Sabnavis believes that gold is a productive asset, Surendra Mehta, National Secretary, India Bullion & Jewellers' Association (IBJA) stated gold has a social value. “Hence, gold remains a social asset.” But Bhargava Vaidya, Bullion Expert, stressed that gold is considered unproductive as people are not able to monetise gold and it therefore lies in bank lockers.
Commenting about gold trends, Keyur Shah, CEO-Precious Metals Business, Muthoot Pappachan Group said, “Our average ticket size for gold, which we sell through our 3,600 branches, is around 3.6 grams. Can you imagine the income level of the consumers that come and purchase from us? For these mass customers, it is about affordability. They purchase gold when they have the cash for it."
Talking about paper gold, Ketan Kothari, Director, Augmont said, “It was India that came out with the concept of paper gold in the first place. But regulations prevented it becoming popular in India, and the markets grew overseas.” He added that most of the retail consumers need physical gold due cultural and religious reasons, even though they opt for ETF. Schemes like ETF have not worked well, but stakeholders feel digital gold will work in this case as gold can be delivered in physical form even in small quantities.
Ranjith Singh Products & Business Development, BSE Ltd., revealed that from Dhanteras till Diwali, there was a collection of Rs 50 crore (last Monday to Friday) on the BSE platform. “The markets have changed nowadays. People who were buying jewellery in the past are now buying coins or digital gold.”
Somasundaram PR said that the industry needs to buck up and work in tandem with policymakers rather than working in silos and looking at short-term issues. “For a large industry like gold, there is unfortunately no self regulatory or self disciplining board. But domestic associations and councils concerned with gold have lately been doing a good job and are trying to upgrade trade practices.” He added the industry too needs to raise issues and concerns with policymakers in an effective manner.
