India, the world’s second largest gold consumer after China, should start a bullion board to regulate trade and a spot exchange to offer uniform prices across the country, according to the World Gold Council.
In a study published Tuesday, the market development organization for the gold industry outlines seven key policy recommendations to monetize the 22,000 tons of gold stocks kept by Indian households:
1. Establish an India Gold Exchange to ensure pricing standardization, increase transparency and improve supply and demand analysis.
2. Establish a Gold Board to manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.
3. Develop accredited refineries in line with international standards including upscaling the current domestic refineries.
4. Allow Indian banks to use gold as part of their liquidity reserves. This would incentivize them to introduce gold-based savings products.
5. Drive monetization of gold by incentivizing banks, revitalize Gold Deposit Schemes, introduce gold-backed investment and savings products.
6. Create a more active marketing strategy for Indian handcrafted jewellery. This could boost exports and highlight India’s expertise in this highly-valued sector e.g. by promoting handcrafted ‘India-made jewellery’ like the Swiss-made watches.
7. Drive the standardization of gold so that buyers and sellers can have faith in both the quality and price of their products. Introduce guidelines for compulsory quality certification of all forms of gold to encourage accountability and foster an environment of trust.
The report also assesses the policies adopted in countries like Turkey and China, which have faced challenges similar to India, but chose to devise public policies to monetize the local stock of gold. Here, some of the key findings:
