Rajesh Exports MD: Spot gold exchange can play a big role in reforming India’s gold market


Rajesh Exports

Despite bolstering an annual demand of 800-900 tons, the Indian gold market is unable to realize its potential, says Rajesh Exports MD, Mr Rajesh Mehta. He believes that the reasons behind this are the various challenges faced by the industry. The lack of quality assurance, weak price transparency, fragmented liquidity and regulatory issues are some of the roadblocks faced by the Indian gold markets. 

With gold spot exchange allowing market participants buy and sell gold in T+2 (Trade plus 2) settlement cycle, the industry is likely to witness a better transparency in pricing. The introduction of multiple reforms and initiatives like the Pradhan Mantri Jan Dhan Yojana, Digital India, demonetization, RERA, and Goods and Services Tax will further boost the sector by bringing tax accountability to the Indian economy. 

The Indian government’s move to address problems related to the gold market by launching schemes, such as gold monetization, sovereign gold bonds, and introduction of Indian gold coin are playing an important role in transforming the gold market.

According to the Rajesh Exports MD, a spot gold exchange can further help in gaining trust of the participants by adopting the best international experiences. It has the potential to create a transparent price detection mechanism for the participants and consumers.

A spot exchange can also function as a facilitator to organize the scrappy gold market in India by bringing a number of key players on the same platform. It can allow players across the chain to source gold without going through a number of layers of mediators. The gold-backed products will be launched more effectively by the financial institutions. The development of the domestic refining and gold scrap market will also be supported by the exchange, steadying the impact of gold on CAD.

Mr Mehta says that the exchange’s own website can be used to spread the information on latest realized price. The information can also be spread through the data service providers and news, to sustain a storehouse of all trades for the purpose of reporting.

Most of the international gold exchanges offer very few standardized contracts to warrant enough liquidity and calibration in trade. To simplify access to a larger user base and permit a truly domestic flair, the exchange network must include all the important local hubs for supply.

The exchange will permit validation of the Indian gold market, improving price transparency and tax compliance. It will also help the government administer the gold trade. Rajesh Exports MD, Mr Rajesh Mehta believes that the spot exchange, surrounding a broader ecosystem for competent trading of gold, has the potential to play a major role in reforming the gold market in India.


32 Comments on Rajesh Exports MD: Spot gold exchange can play a big role in reforming India’s gold market

  1. Gold swapping is booming. Swapping our gold with stylish new jewellery won’t just make us look beautiful, but also feel beautiful. As those outdated jewelries are kept in lockers and we just wait for the time to fly, so that we can get better returns in future. Then why to leave our gold in the lockers, when we can exchange them for jewellery that we can wear every day and flaunt in this beautiful world.

  2. Gold is one of the most precious metal. And being malleable & ductile it can be recycled. Exchanging gold with other gold ornaments helps karigars to process it into thin sheets which can be used in arts and crafts for gilding. Being a gold jeweler in Mumbai, I have seen people coming to our shops for exchanging it with new designs.

  3. A spot exchange can also function as a facilitator to organize the scrappy gold market in India. It can allow players across the chain to source gold without going through a number of layers of mediators.

  4. India is set to introduce a physical gold exchange that would bring about an improvement in the gold pricing. The concept of launching the physical exchange was to bring about an improvement in the gold market and introduce a sense of transparency. India, being the second largest consumer of the precious yellow metal will benefit greatly from such an initiative.

  5. Many jewellers and traders import gold in refined form from markets like Dubai and Singapore. Further, the gold market remains fragmented in India and non-trivial price arbitrage exists across the channels of gold buying and selling. A gold spot exchange in India could be a national channel to buy and sell standardized quality gold in India.

  6. The operating model of a spot exchange has a number of key elements, such as the trading platform, product specification, delivery location and vaulting services. And this will surely improve the gold market.

  7. Most of the international
    gold exchanges offer very few standardized contracts to warrant enough liquidity and calibration in trade. Indian government’s move to address problems related to the gold market by launching schemes, such as gold monetization, sovereign gold bonds will play an important role in transforming India’s Gold market.

  8. What I feel is, a spot exchange can create a transparent price discovery mechanism and the traded price can also be used as the “India reference” price. The exchange will enable formalisation of the Indian gold market which in turn will improve transparency and tax compliance. The exchange will also support development of the domestic refining and gold scrap market and will also stabilise the simpact of gold on the Current Account Deficit (CAD)

  9. As the global gold market continues to shift from the West to the East, many Asian countries, such as Turkey, China, Singapore, and the UAE, have set up global-scale physical infrastructure for refining, storage, transport, trading and financing of gold to cater to the spurt in demand in the region. Gold exchanges and related infrastructure set up by these countries appear to have greatly enhanced the efficiency of their gold markets by way of efficient price discovery.

  10. The Exchange would be economically feasible if it will draw a minimum trade quantity of about 100 tonnes a year, which appears quite feasible, given the annual demand of about 1,000 tonnes in India and that there are many segments of the gold market that are underserved by the existing market structure.

  11. https://uploads.disquscdn.com/images/b98ffc5d3a3d79e7e214075c7d53ef0fb8bbec098ead57af83de8e9ccb3ec240.jpg
    Gold exchange infrastructure set up by countries like Singapore, UAE, China have greatly enhanced the efficiency of their gold markets by way of:

    Efficient price discovery.
    Quality assurance.
    Active retail participation.
    Use of gold bars and gold coins.
    Use of gold-linked financial products instead of jewellery for investment purposes.
    Greater integration with financial markets through gold leasing and lending.

    Hope it will help India too.

  12. What I feel is that spot exchange can create a transparent price discovery mechanism and the traded price can also be used as the “India reference” price. India is set to introduce a physical gold exchange that would bring about an improvement in the gold pricing.

  13. A spot trade can likewise work as a facilitator to sort out the sketchy gold market in India by expediting various key players a similar stage. It can enable players over the fasten to source gold without experiencing various layers of arbiters.

  14. With an annual demand of approximately 800-900 tonnes, the size of the Indian gold market is second only to that of China. Despite its significant size and important global position, the Indian gold market is unable to realise its potential due to multiple challenges. These challenges include lack of quality assurance, weak price transparency and fragmented liquidity and regulatory issues. There is a pressing need to reform the gold trading market in India, and a spot exchange, encompassing a broad ecosystem for efficient physical trading of gold, could play a significant role in reforming the gold market in India.

  15. This spot exchange in India would surely help much to create a vibrant gold ecosystem matching India’s large share of global gold consumption. Its now the time to just wait & watch.

  16. A spot trade can likewise work as a facilitator to sort out the sketchy gold market in India. It can enable players over the tie to source gold without experiencing various layers of middle people.

  17. This exchange will permit validation of the Indian gold market, improving price transparency and tax compliance.

  18. Once India starts exporting gold, it will have a say in determining the price of the precious metal globally. So far, despite the world’s largest consumer, India is only a price taker, meaning that prices in the country are determined by movements in the international market.

  19. The working model of a spot trade has various key components, for example, the exchanging stage, item detail, conveyance area and vaulting administrations. Also, this will without a doubt enhance the gold market.

  20. This spot trade in India would clearly help much to make a lively gold biological system coordinating India’s expansive offer of worldwide gold utilization. Its now the opportunity to simply hold up and watch.

  21. Gold spot exchange will transform the gold sector in India. But the guidelines for the gold spot exchange are yet to be finalised.

  22. Numerous gem specialists and dealers import gold in refined frame from business sectors like Dubai and Singapore. Further, the gold market stays divided in India and non-insignificant value arbitrage exists over the channels of gold purchasing and offering. A gold spot trade in India could be a national channel to purchase and offer institutionalized quality gold in India.

  23. These government schemes will play a vital role in reforming India’s gold market. It will be a great help for small jewellers too.

  24. Despite being the second largest gold importer in the world with a demand of nearly 1,000 tonne annually, India lacks many key elements of the gold ecosystem. A gold exchange would lead to efficient price discovery, assurance in the quality of gold, active retail participation, greater integration with financial markets, and greater gold recycling.
    Hoping for the best !!

  25. After implementation of gold spot exchange we might see transparency in gold prices, which is much more beneficial for all gold players across the country.

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