Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

SUMMARY AND POSITIVE FINDINGS
GOLD COINS AND NET BAR HOARDING OVER THE NEXT 10 YEARS
MARKET FEATURES
Intermediate role
The trade considers generally that most coins and most personal purchases of TT bars are intermediate products. In their
view, more than 50% of coins would be converted into jewellery and most personal TT bars would enter the jewellery
market over time.
Coins
Products: Thousands of different coins are fabricated. Most are K22. Many are crude “duplicate” sovereigns. 999 and 995
purity coins are also available.
Distribution: Jewellery retailers are the primary conduits. Most stock or obtain coins on request, and will exchange them
for jewellery or buy them back. Banks are not active due to low profitability. An Internet company, Fabmart (Bangalore) is
pioneering the sale of coins through its website.
Motivation. Most coins are bought for 3 purposes: family gifts, corporate gifts or personal savings. Demand tends to be
seasonal during the marriage seasons and at festivals. Most coins are accumulated for marriage-related purposes. In urban
areas, such as Mumbai, retailers advise that some consumers, who would previously have hoarded jewellery for marriagerelated
purposes, are now buying more coins. Corporate companies are buying large quantities as gifts and for use as prizes
for competitions and lotteries.
Bars
Products: As few standard cast and minted bars are fabricated, the TT bar (sometimes converted into a rod in some rural
areas) is the primary bar investment product.
Distribution: TT bars can be bought and sold through jewellery retailers and smaller bullion dealers.
Motivation: Private TT bar hoarding in rural and urban areas is widely reported as low. According to the trade, TT bars are
bought mainly by a relatively small number of speculators in major cities, and those who wish to “park” their funds
temporarily.
POSITIVE FINDINGS
Overall demand
Some retailers, notably in Mumbai and Ahmedabad, observe that more consumers are starting to buy coins and TT bars,
rather than jewellery, for marriage-related gold accumulation and savings purposes. Demand is likely to increase in the
larger cities.
Many consumers, especially in rural areas, still view ownership of TT bars as illegal, or indicative of an association with the
underground economy. If the trade should choose to correct the current image of TT bars, after taking other factors into
account, demand could be stimulated.
Legal tender Indian gold coin
Reported to be under consideration.
Forward Market Commission
The proposal to establish a gold dealing exchange similar to the Istanbul Gold Exchange could encourage much more
speculative trading.
PERSPECTIVE
• Demand for coins as gifts, and for coins/bars for marriage-related gold accumulation purposes is
expected to grow over the decade.
• The issue of a legal tender Indian gold bullion coin might be successful over time.
Predicting the sales of an Indian coin, if issued, is difficult because it would face competition from the plethora of existing
“coins” available. However, some banks and large jewellery retailers would feel obliged to stock them, and over the decade
its sales would be likely to increase.
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AN INTRODUCTION TO THE INDIAN GOLD MARKET