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Gold bonds scheme fails to glitter

Discussion in 'World Economy' started by Manmohan Yadav, Dec 20, 2015.

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  1. Manmohan Yadav

    Manmohan Yadav Brigadier STAR MEMBER

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    Mumbai: The government’s much-touted sovereign gold bond scheme has failed to cut much ice with the public, if the final amount of about Rs.150 crore is any indication, say bankers, who also blamed the high issue price as the biggest dampener. Public sector bankers, whom PTI spoke to, also attributed the many market holidays and affinity of the public towards physical gold for the subdued demand for ambitious sovereign gold bond scheme, which was the maiden offering by the government so far.

    Although, the Reserve Bank of India (RBI) has not formally disclosed the overall funds collected under the scheme, bankers pegged it at around Rs.150 crore. “The primary reason for this lower-than-expected collection is the higher issue price. The RBI had set it at Rs.2,684 a gram, whereas the market price was lower. Why should somebody buy at higher price,” said a senior banker from a state-run bank. He said his bank was targeting around Rs.50 crore from the scheme but could only collect one-tenth of it.

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    Market experts said a 4-5% premium on the market price is not acceptable to a buyer, therefore the dismal demand. “In our country, people like to worship physical gold on Dhanteras, which is an auspicious day to buy the precious metal. We cannot resist ourselves from buying gold,” said another public sector bank official. Prime Minister Narendra Modi, on 5 November, had launched three ambitious schemes to reduce the physical demand for gold and fish out 20,000 tonnes of the precious metal worth $800 billion lying idle with households.

    Modi launched the maiden sovereign gold bond, gold monetization and the Indian gold coin scheme with much fanfare. The first tranche of the sovereign gold bond scheme was open for subscription from 5-20 November. “The collection under the scheme would have been better had the government started the scheme earlier. There were a few holidays during the subscription period which has impacted the response,” said a senior official of a state-run bank.

    However, some bank officials described the response as “reasonable”, considering this was the first time the government launched such a product. “We saw greater attraction for the bond scheme compared to the inflation-indexed bonds. There were no targets given to us by the RBI. This was aimed at seeding of the product. I think with more such issuances, the acceptance level will increase,” said an official of a large public sector bank.

    Under the scheme, the bonds were denominated in the multiples of grams of gold with a basic unit of 1 gram. An individual or institution was allowed a minimum investment of 2 units or 2 grams and capped the maximum investment up to 500 grams per person per fiscal. While the bonds have an eight year tenor, an investor could exit from the fifth year on interest payment dates.

    The bond bears interest rate of 2.75% per annum on the amount of initial investment. Interest will be paid half yearly and the last interest will be paid on maturity along with the principal. The pricing of the bonds, which is rupee terms, is based on the basis of the previous week’s simple average closing price for gold of .999 purity, as disclosed by the India Bullion and Jewellers Association.
     
  2. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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    As per me the major reasons behind failure of this scheme is,(1)-SOCIAL CAUSE-->You give say a necklace to government and they will not return the same necklace after the maturity of bond period.We Indians are bonded by family values and these ornaments are blessings of our elder ones plus middle class buy them mostly for marrige ceremony And no India women will give wishfully these blessings/love/sweet memories at any cost and If due to any reason they have to give it up, they want the same piece in return........(2)ECONOMIC CAUSE-->The government gives intrest only on the carat of gold and not the jewlery itself and after maturity of bond what they give is a metal piece of 22 carat..The making charges are 20-25% in India so a clearcut loss of 40% at the minimum..
     
  3. randomradio

    randomradio Colonel REGISTERED

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    People who have jewellery will be crazy to be part of this. You can think about it if you have bullion.
     
  4. TickTickIndian

    TickTickIndian BANNED BANNED

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    Believe what you want, but this Gold confiscation scheme has been unlieshed by Rothschild through his central bank agents (Raguram Rajan in Bharat). To add to their fraudulent fractional reserve system. And then they will take away our gold and give us worthless paper just like East India Company started the Central Bank of Bharat after East India Company won the false flag war that they arranged in the subcontinent with the thoroughly infiltrated Maratha empire, and looted our gold through the banks.

    Keep your gold with you!! Don't buy any bonds. If you don have to buy, use only the gold coin exchange.
     
  5. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    The main reason is

    People buy gold ( physical ) ro diversify from paper ( electronic ) based may ney / savings / investments

    Gold bond against brings in paper / electronic component
     
  6. TickTickIndian

    TickTickIndian BANNED BANNED

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    This is why Bharatiyans are considered an intelligent race.
     
  7. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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    Yahan par bhi conspiracy; Okay let us assume that someone is trying to take Indian gold...Don't you think GOI might be aware of this..And by the way Modi was about to sack RBI governer after becoming the PM but saved by his credentials and FM....
    And if that is the case why GOI will issue such bonds? Are you saying that GOI is involved too..
     
  8. TickTickIndian

    TickTickIndian BANNED BANNED

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    GOI has strength, but Rothschild mafia or East India Company also has that. Raghuram Rajan represents Rothschild. He was working for Bilderberg group controlled by Rothschild before coming to Bharat. Check.
     
  9. TickTickIndian

    TickTickIndian BANNED BANNED

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    What do you think happened in Greece?? Why do you think Germany's gold was not returned from Rothschild's vaults in puppet America??

    If you can run a bank like Fedreal Reserve in America and not be touched by any law on the planet or auditing requests, do you think it is some coincidence?? If you ask me such things again, I'll consider you among the naive.
     
  10. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    Guys

    Follow zerohedge on twitter or visit their website it is the best for global economic news & analysis

    They too have done an article on India's gold monetization scheme ( ah on its failure )
     
  11. ricky123

    ricky123 Captain FULL MEMBER

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    there are 2 things why this will not work in india . the gold is in form of jewelry which might have been given by some relatives or loved ones .no one in india will part with this unless in emergency . 2 : it doesnt make sense to give the jewelary to GOV and they will melt it . you instantly lose some weight of gold .
     
  12. INDIAN NATIONALIST

    INDIAN NATIONALIST Major SENIOR MEMBER

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    A bit of a regressive tactic; saturate the markets with a convincing synthetic alternative to gold. Most folks will either embrace the new, cheaper stuff where only aesthetics are a concern, or will loose interest in investing in jewelry. Either way, it will ultimately mean more disposable income will be invested elsewhere. Maybe cellular handset fabricated in a domestic factory on wedding day, along with a gold necklace, instead of 3 gold necklaces and risk one or more turning out false gold.
     
    Last edited: Dec 21, 2015
  13. randomradio

    randomradio Colonel REGISTERED

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  14. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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    When Narsimha Rao Govt decided for economic reforms in India he called one of the most eminent economist at that time (i can't recall his name but he was to be appointed as economic adviser of PM modi)and asked him how to do economic reforms he told MMS(then FM)tht Indian women are saving concerned,You should make Shopping malls in India so that women come there are buy goods this way they put money in the economy but after 10 years the saving improved to 38% which was 16% in 91..So this means you can not cheat Indian Women.....
     
  15. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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    Can you prove what you are saying in a court of law...You can go to the media and tell your point to them or some minister...If you want to meet someone like media person ,politician, I can arrange that for you...Why are you scared of what are you waiting for? Yes you rightly said that I'm among the naive because i can not connect the dots as you do...If you don't want to reply here you can PM me......Let us expose this world wide conspiracy......What is that which no one else in this world can figure out but you.......Can you post any link posts etc similar to your views..
     
    ricky123 likes this.
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