Now we see the violence inherent in the system; india gold etfs

[pmbug]

In recent months Indian banks have launched a major advertising campaign to persuade Indians of the virtues of paper gold and silver products. It looks like this campaign is bearing fruit, as Indian investors have rapidly increased their purchases of shares in gold ETFs. Traders who operate traditional businesses based on trade in physical metals feel that regulations are favouring banks and financial service agencies to their disadvantage.
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In recent years the financial industry has been luring Indian citizens with the argument that ETFs are more attractive in terms of price and taxes than physical gold and silver products such as coins, bars or jewellery. ...

The Indian government is already planning to double import duties on precious metals; more taxes will place yet more burdens on the Indian metals market. As a result, premiums on jewellery in India are rising. In contrast, in Arab countries such as Dubai the purchase of physical precious metals is not subject to tax. More and more Indian traders are travelling to Dubai and to the United Arab Emirates to purchase silver and gold.

http://www.goldmoney.com/gold-resea...n-in-the-eye-of-indian-jewellery-traders.html

The increased import duty has already been announced.

I thought Indians as a whole were smarter than this.

 

[ancona]

I tnink the average indian is still buying physical, as it is a centuries old tradition in indian households. Those who can afford to invest more than a few hundred thousand rupees will go to ETF's because of the new duties on imports. I would also ask if India has any domestic production, and if so, is it exempt from the duties?

 

[mmerlinn]

I thought Indians as a whole were smarter than this.

Bureaucrats and politicians are the same everywhere. Their ONLY duty is to feather THEIR beds at the expense of the common people. In other words, THEY have passed laws making it possible for THEM, and only them, to "legally" STEAL the wealth of the masses.

 

[pmbug]

Aw hell...

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Trading in Goldman Sachs Group Inc.’s gold ETF in India surged almost 11 fold, leading an advance in gold securities, as investors bought gold to mark the auspicious Hindu festival of Akshaya Tritiya.

Volumes in GS Gold BeEs, India’s biggest exchange-traded fund backed by gold, was 937,816 units on the National Stock Exchange of India Ltd. at 4:54 p.m. in Mumbai, up from 85,376 units yesterday and more than the 101,914 average daily volumes in the last six months through yesterday, according to data compiled by Bloomberg.

This is significant volume. Each unit represents about 1 gram of physical gold and therefore 937,816 units is the equivalent of some 29,170 ounces of gold which at today’s prices is some $47 million of daily volume for just one gold ETF in India.

The Goldman Sachs India gold ETF is just one of many new ETFs in India.

Trading in Kotak Gold ETF jumped more than eightfold to 226,032 units.

Gold demand in India, the world’s biggest importer, may climb as much as 25% to 15 metric tons on Akshaya this year, according to Rajesh Exports Ltd., the country’s biggest gold-jewelry exporter.

Assets held by local gold funds reached a record 98.9 billion rupees ($1.87 billion) at the end of March, according to the Association of Mutual Funds in India. GS Gold BeEs had assets worth 29.6 billion rupees (some $563 million (USD)) as of March 31, data from the association showed.

Trading in UTI-Gold Exchange Traded Fund climbed more than fivefold, while volumes in Reliance Gold ETF, the second-biggest fund, was up more than sixfold, data shows.
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http://www.zerohedge.com/news/india...achs-gold-etf-india-sees-11-fold-surge-volume

 

[pmbug]

Gold ETF holdings in India have reached stratospheric numbers. Sliding close to the $2 billion mark for the first time as of April 30, Indian investors appear to be veering towards paper gold, shunning the stock markets and the purchase of physical gold with equal ease.

Assets in gold electronic traded funds (ETFs) increased to Rs 103.06 billion ($1.91 billion) as of April 30, from Rs 98.86 billion as on March 31. During the one month period from March to April 2012, assets grew 3.4%.
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http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=151433&sn=Detail

 

[pmbug]

...
"There is so much gold already available with exchange-traded funds. They can be allowed to lend their gold," said Lakshmi Iyer, head of fixed income and products at Kotak Mahindra Mutual Fund.

"Investors would desist from buying physical gold if they are allowed to redeem gold ETFs in the form of coins," a top official with a leading fund house said.

"Gold ETFs can be allowed to lend to big jewellers after putting in place the necessary regulations. It would be a good starting point," Lakshmi said.

Gold ETFs manage assets worth nearly Rs 12,000 crore and this works out to around 40 tonnes of gold at current market prices.

Gold loans have played a positive role in monetizing the yellow metal. Banks and non-banking finance companies are estimated to have offered gold loans to the tune of Rs. 1.21 lakh crore.

The gold mortgaged to avail loans is estimated to be around 621 tonnes in 2012, data compiled by Kotak Institutional Equities showed. This represented 3.4% of the gold stocks in the country.

http://gata.org/node/12075

 

[pmbug]

India's government announces steps to unfreeze gold physically held by mutual funds under gold exchange traded funds (ETF), by allowing them to invest in gold deposit schemes of banks.
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The government has proposed the provision a link between the gold ETF and the gold deposit scheme. The objective is to unfreeze or release a part of the gold physically held by mutual funds under gold ETFs and enable them to deposit the gold with banks under the Gold Deposit Scheme.

The advantage will be that a part of the gold lying in stock would be brought into circulation and would partially meet the requirements of the gems and jewellery trade.

Currently, mutual funds do not earn any returns on the gold held by them under gold ETFs. Post the duty hike, gold ETFs can earn interest, notes Sanjiv Shah of Goldman Sachs AMC.
...

http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=174080&sn=Detail

Government sanctioned ponzi scheme involving gold (brought to you by Goldman Sachs of course). I think we all know how this is going to end.

 

[pmbug]

India's high gold imports are hurting the country's current account deficit. The government's import restrictions are hurting the populace. The only organisation not worried, as of now, are gold backed exchange traded funds.

Worried investors are veering towards the country’s 14 gold exchange traded funds (ETFs), which together have garnered 40,000 kilo of the precious metal.

The ETFs allow investors to trade in the metal in a non physical form and electronically on stock exchanges. Gold ETFs debuted in India about six years ago.

The first gold ETF launched in 2007 by Benchmark Mutual Fund (now Goldman Sachs) was followed by 13 others in quick succession. The 14 mutual fund houses present in this segment are managing gold assets worth nearly $2.2 billion (Rs 120 billion).

In terms of gold weight, Goldman Sachs Gold ETF manages 11,218 kilo, followed by RShares Gold ETF with nearly 9,800 kilo. Kotak Gold ETF and SBI Gold ETS hold about 4,500 kilo each.

Incidentally, comparatively smaller gold ETFs from UTI and HDFC fund houses manage gold weighing less than 3 tonne each.

While one might consider the gold stocked at the ETF a huge cache, it could also prove to be a bane for some. SBI chairman Pratip Chaudhuri was recently quoted by newswire agencies as saying that the bank was unable to profit from the two tonne of gold lying in the gold deposit scheme of the bank, or lend it out.

Recently, the Indian government allowed gold ETFs to deposit part of their gold holdings with banks in an effort to manage the demand for imported gold. The idea was to put the gold corpus of ETFs to productive use.

The SBI chairman, however, is not too hopeful. Gold ETF's have a tax rate of 10%, as compared to bank deposit interest tax rate at 30%. Investors would necessarily go to gold ETFs, rather than invest in bank deposits.

Incidentally, bank finance for purchases of gold bullion has been prohibited, though banks have been allowed to continue their role as nominated agencies in gold imports. The government had also strongly advocated the cause to unlock the value of idle or unproductive gold, which lays in vaults across the country.

The SBI chairman complained that the government was not making it conducive for investors to bring their gold to the bank.

If an investor buys gold from the bank, he cannot return the gold to the bank. This has limited many purchases, since the selling option does not exist with gold bought from banks across the country.

The chairman has suggested that the government ensure a two way opportunity, a buy and sell option, and have investors approach banks either to buy or to park their precious metal.

However, at 40 tonnes, India's total gold ETF holding is only about 10% of the 398 tonne of gold the country imported in the April-October 2012 period.

http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=176882&sn=Detail