"Mapping Gold Policy- Present to Future Financialisation of gold: the dawn of a new era in Indian gold trade
India s gold market is highly complex with a large number of buyers and sellers International refiners Supply side Gold importers Banks Wholesale traders Intermediaries Small bullion traders Demand side Manufacturers International bullion banks Dore importers Retailers International miners Consumers Domestic refiners Domestic miners Scrap dealers Retail participants Other FIs Vaults Assayers Flow of gold Source: A gold spot exchange Delivering structural reforms, 2017 by World Gold Council Infrastructure
SUPPLIES IMPORT DOMESTIC GOLD Bullion Dore LGD Scrap GMS Collateral Scrap Mine ACCREDITED BANKS / NOMINATED AGENCY / REFINER MEMBERS OF THE EXCHANGE DEMAND SPOT EXCHANGE (ONLY ACCREDITED BARS) REFINED BARS AIF/ETF BULLION TRADER BANKS JEWELLERS INDUSTRIAL DEMAND AIF / MF / ETF / RETAIL INVESTOR BUY PHYSICAL GOLD EXPORTERS (Duty free) REPLENISH FROM EXCHANGE MEDALLIONS JEWELLERY LEASED TO JEWELLER ALLOCATED Storage cost SOURCE CUSTODIAN BANK JEWELLERS UNALLOCATED No storage cost LEND TO BANKS BANKS HEDGE (DOMESTIC / OVERSEAS) SOLD OUTRIGHT UNALLOCATED GOLD RECYCLED GOLD GML (IMPORTED / GMS) OUTRIGHT (IMPORTED / GMS) GMS BIPATRIATE AGREEMENT WITH BANKS. CUSTOMERS BUYGOLD BACKED PRODUCTS FROM BANKS CUSTOMER REDEEMS AS JEWELLERY SPOT EXCHANGE / BANK/ NA
GOLD POLICY FRAMEWORK AND ITS PILLARS Financialisation Gold as an asset class Minimize CAD Issues Value addition to economy Gold Monetisation Scheme and Savings Schemes Refining, Jewelry Making and Trade Banking and Bullion Banking India Good Delivery Standards Spot Exchange GOLD POLICY LANDSCAPE 4
q Trading Regulation q Systematic Growth & Development GOLD POLICY WHEEL RBI / SEBI/ BIS q Consumer Protection Regulators of the trade- OTC, Forwards, Futures and Spot v Trading & Clearing v Physical gold interface v Vaulting ecosystem v Gold Deposit and Savings Account v Involvement of Jewelers and Refiners v Active participation by banks GMS in a retrospective and prospective basis enables growth in banking Bullion Bank Revamped GMS Becoming part of global gold financial system Reduced pressure on CAD Standardisation adds to efforts of marketisation and internationalisation FINANCIALISATION Trust Traceability Communication Market access Empanels more registered players in system to facilitate GMS Spot Exchange Domestic Gold Council/ G&J Council Through a designated group makes easy to communicate standardisation v Creation of India good delivery which takes into account Responsible Sourcing v Support revamped GMS/Spot Exchange v Only gold from accredited refiners to be acceptable v Industry growth v Exports enablement v Skill & Technological Development v Organized gold market v Member communication v Knowledge hub v Promotion of world-class standards Regulators of the trade- OTC, Forwards, Futures and Spot GOLD BOARD
Although gold and silver are not by nature money, money is by nature gold and silver- Karl Marx Reach me at: head-igpc@iima.ac.in India Gold Policy Centre Indian Institute of Management Vastrapur, Ahmedabad 380015, Gujarat, India T : +91 79 66324896 Email: chr-igpc@iima.ac.in Twitter: https://twitter.com/@indiagoldpolicy India Gold Policy Centre is funded by World Gold Council 6