Indian Gold Book:Indian Gold Book - Gold Bars Worldwide
Indian Gold Book:Indian Gold Book - Gold Bars Worldwide
Indian Gold Book:Indian Gold Book - Gold Bars Worldwide
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BAR HOARDING<br />
Bullion dealers and jewellery retailers in urban and rural areas generally reported that, in their view, bar<br />
hoarding by the public is low.<br />
The exceptions were some trade entities in Mumbai and Ahmedabad.<br />
In major cities, speculative trading in TT bars occurs but the number of speculators is regarded as small and confined<br />
mainly to the “elite”.<br />
Anecdotal evidence suggests that the net increase in bars hoarded may have been as low as 20 tonnes in 2001.<br />
The level of net bar hoarding is an unresolved issue. Some <strong>Indian</strong> analysts believe it may be higher than the estimates<br />
in this report.<br />
PERSPECTIVE<br />
Several reasons for the low level of bar hoarding were advanced.<br />
• Owning imported TT bars implied an association with the underground economy. Even if bought with legitimate funds,<br />
bar ownership would be queried by the tax authorities.<br />
• Many people were still not aware that TT bar ownership, banned during the period of the <strong>Gold</strong> (Control) Act, was now<br />
legal. Even those who were aware that it is legal felt more comfortable owning jewellery and coins.<br />
• <strong>Gold</strong> is not an “idle” asset. <strong>Gold</strong> in the form of jewellery could be worn. Most wives would also persuade their husbands<br />
to convert bars, if held, into jewellery.<br />
• Unlike Western countries, gold jewellery is still widely regarded as the best way to “invest” in gold for store of value and<br />
savings purposes.<br />
• In the early to mid-1990s, there had been more bar hoarding, but it had declined in recent years in most States due to<br />
the static rupee gold price.<br />
In the major metropolitan cities, the trade did report some private speculation in bars. There were large investors who<br />
bought and sold TT bars (sometimes 100 or more), but this did not constitute bar hoarding. There appeared to be little<br />
long-term accumulation. The number of speculators had also fallen since the mid to late 1990s.<br />
Some trade entities, in the metropolitan cities, also commented that significant quantities of TT bars may be bought to<br />
“park” underground funds, but in their view the bars were likely to be held for a short period before being used for other<br />
purposes.<br />
Some top end jewellery retailers, in Mumbai in particular, also observed that, although few TT bars were currently used to<br />
pay for jewellery (apart from NRI’s who often brought back bars and coins for this purpose), they expected consumers to<br />
accumulate more bars in the future. There was some evidence that this was starting to happen. It would be cheaper to<br />
convert accumulated bars, rather than accumulated jewellery, into new jewellery for marriage purposes.<br />
The trade made these observations in the context of a static rupee gold price between 1997 - 2001. Although the price had<br />
risen since September 2001, they believed that the public were still wary about the direction of the gold price. Attitudes to<br />
bar ownership might change but, in their view, most purchases in the future were more likely to be for short-term<br />
speculative purposes, or accumulated for conversion into jewellery.<br />
ABOVE GROUND STOCKS<br />
Anecdotal evidence (at this time) suggests that bar hoarding as a proportion of India’s above ground stocks<br />
of gold may be below 2%, i.e. below 240 tonnes.<br />
The net annual increase in the above ground stock of TT and other bars appears to have been small in recent years.<br />
The annual increase in the net amount of bars hoarded is difficult to resolve as some trade entities appear not to<br />
differentiate clearly between the gross and net level of private bar purchases in any one year.<br />
The on-going dishoarding of bars, originally bought for speculative or “money” purposes, or for conversion into jewellery<br />
over time, appears not to be taken sufficiently into account.<br />
86<br />
AN INTRODUCTION TO THE INDIAN GOLD MARKET