The Trend and Future of Gold Coin Trading in India

Topics: Gold as an investment, Gold, Gold bar Pages: 2 (711 words) Published: September 4, 2011
The trend and future of Gold coin trading in India with respect to the Banking Industry.

India is one of the countries in the world where buying of gold is a tradition, gold commodities are bought and sold in a vast quantity. The investments in gold are useful in the period of difficulties, problems, emergencies, mortgages for getting loan, quick amount for medical treatment, marriages, plans about house, purchasing any commodity, education of children etc. Gold has greater liquidity hence, it reduces risk and owing to its ever increasing rates, it is the one amongst the best form of investment in terms of returns. Gold is a weapon against inflation and a saviour during recession. Gold, having a high value to weight ratio, is easily transportable compared to many other commodities. One of the factors increasing its value is its scarcity and ever increasing demand. The real fact of economy is people never stop buying gold may it be an up or down in the market. India, being the largest importer of the metal, accounts for over 20% of the global demand for gold. As much as 200 tons of gold bars and coins are traded in a year, but only 10% of it is accounted for by banks, the rest is accounted by the local gold traders and vendors . Gold coins are the hottest commodity in India these days. The fact that the price of gold rose steadily by around 300% from 4395 in 2000 to 16800 in 2010 is attracting more and more customers for investment. These non-perishable items are sold like hot cakes during festivals. Indian banks started trading in gold coins in 2004. They are sold in different denominations like 0.5 gm, 1 gm, 2 gm, 2.5 gm, 5 gm, 8 gm, 10 gm, 20 gm, 50 gm and 100gm. Even though investment-led demand accounts for 30 percent of gold sales, it is growing faster than the jewellery segment. Many Indians these days prefer gold coins and bars as investment options. The customer preference of gold buyers in India is changing fast. All these years, buying gold...
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