Gold Monetisation scheme and what you should know.
You would have seen today’s news about the Gold Monetisation Scheme and wondered whether it would be useful for you. Here’s what you should know about it:
–Customers can bring their idle gold, and get it certified for purity from 350 Hallmarking centres.
–You can open a gold savings account with a bank, which will reflect the receipt of your gold.
–Gold then is sent to the refinery – it means your gold will be melted if its jewellery and deposited as a bar in state-owned vaults.
–If jewellers want to buy gold, the bank will ask the refinery to send the agreed amount of gold to them for their business.
–When you want to close the account, you will have the option to get cash, physical gold or dematerialized gold.
–The interest rates are left to banks to decide.
–The tenure is one year or its multiples.
CURRENT SITUATION
* Only 15 tonnes gold mobilised in 15 yrs (8tonnes by SBI, 7 tonnes by three other banks).
* Temples are the biggest depositors, especially two temples in the South, and one in Mumbai.
* One thousand tonnes of gold imported by India a year, on an average
* Twenty-two thousand tonnes of gold estimated to be with Indian households.
LIKELY SCENARIO
* Interest rates left to banks, could be about 1% payable in gold terms; tenure one year and multiples
* Banks might get flexibility to use the gold mobilised to meet Cash Reserve Ratio/Statutory Liquidity Ratio norms.
*The government is likely to exempt the scheme from wealth tax, capital gains tax and income tax.
* Some 350 Hallmarking centres, including those set up by jewellers, will give purity certificates. This means the indirect involvement of jewellers and will speed up the process.
Our take on this scheme.
In the past 15 years, only 15 tonnes of gold were mobilised. Temples were the biggest depositors in the scheme.
Although gold has delivered a decent return over the past 10 years, it has underperformed badly in the past 4 years.
If you have gold coins or bars, take advantage of the scheme.
If you have old jewellery and are planning to recycle them in the next few years, you can participate in the scheme. Why? Because when import of gold comes down, the premium against international markets will come down and gold may underperform even more.
If you deposit it now and it is melted, you may get a better price. Gold left idly may earn interest if you bought it with cash. You may be able to clean up your books one time.
There are tax advantages in the scheme.
If you want personalized advice get in touch with us, because we are one of the few SEBI-licensed advisors in Tamil Nadu and authorised to give advice across asset classes.