Gold Exchange will Open in India

On the lines of London, New York, gold exchange is going to open in India too. Market regulator SEBI has given its approval. Here gold exchange means physical gold exchange. That is, like the stock exchange, now there will be a separate exchange for gold in the country. It is being said that with the introduction of gold exchange, gold prices will improve, that is, the possibility of ‘manipulation’ will be reduced and cash transactions will also increase through buying and selling.

Gold can be bought like shares in the gold exchange. Actually all this work will be done through electronic gold receipt. The advantage of this will be that customers will see transparency in price and quality.

Gold exchange will open in India on the lines of London, New York, what will be the benefit to common investors?

So far, gold has only got the status of a commodity, but with the start of the exchange, it will be able to get financial status. The kind of status that shares and mutual funds etc.

1-How the exchange will work
Gold exchange will work in three ways. You will first deposit the gold with the trading company. This trading company will deposit its gold with the vault of the exchange. The Vault Manager of the trading company will issue an Electronic Gold Receipt or EGR to the investor in exchange for the gold. You will be able to trade through this EGR. This EGR can be listed on the exchange. After listing, EGR will be traded like a share. If you want physical gold in lieu of EGR EGR then you have to surrender the EGR to the exchange. Instead, you will get physical gold. Vault Manager will give you physical gold.

2-Who will run the Gold Exchange
This exchange will be launched by India Bullion and Jewelers Association (IBJA). It is a Bullion Association of Mumbai. India ranks second in the world in the consumption of gold. On the price front, India will get many benefits from the Gold Exchange. IBJA includes gold dealers, traders and jewelers from across the country. This organization is preparing to set up the first gold exchange in the country. Gold exchange will enable standard pricing of gold and since with its help jewellers, traders, banks and buyers will be able to buy gold easily, cash transactions will also increase.

3- When will the gold exchange open
IBJA spokesperson Ketan Shroff says that the plan is to start physical gold exchange in the next 6 months. What will be its structure and how will the ownership be, all these things are under consideration. Initially, this exchange will be linked with two or three gold and silver delivery centers in the country. This exchange will help the government in monitoring the gold trade.

Till now the buying and selling of gold is done through Multi Commodity Exchange or MCX and National Commodity and Derivatives Exchange or NCDEX. Recently, Gold Monetization Scheme and Sovereign Gold Scheme have been introduced, after which the need for gold exchange was emphasized. With the opening of the Gold Exchange, the existing quantity of gold will be utilized and this will reduce the import of gold. Therefore, it will help in bridging the trade deficit of the government.

4-Who will be able to trade
Jewelers, retailers and refiners of the country will benefit from the gold exchange. These entities will now be able to trade on the regulated platform. With this, demand and supply can be taken into consideration. Due to this, jewelers will get relief from paying heavy premium on gold. Banks are now the main importers who will benefit greatly from the gold exchange. Currently, banks are not allowed to trade for futures contracts on the country’s commodity exchanges. Now they too will be able to trade. Right now this rule is applicable in many countries of the world. For example, this system is running in China, where all types of imported gold are bought and sold through the exchange.

5-What will be the benefit to the common investors
The biggest advantage will be in bringing uniformity in gold prices. Right now different rates are seen in each city. According to the rates printed in newspapers and media, jewelers charge money from customers. With the introduction of gold exchange, there will be uniformity in prices. Small jewelers and big jewelers will be able to charge the same price from the customers.

So far, gold has only got the status of a commodity, but with the start of the exchange, it will be able to get financial status. The kind of status that shares and mutual funds etc. have got. Due to the exchange, India will become a gold trading hub where foreign traders will also do business. Customers will be able to buy gold up to 1 kg, 100 grams and 50 grams from the exchange. This purchase will be in the form of EGR. With certain conditions, 5 grams and 10 grams of gold will also be purchased.

Reviewer overview

Gold Exchange will Open in India - /10

Summary

On the lines of London, New York, gold exchange is going to open in India too. Market regulator SEBI has given its approval. Here gold exchange means physical gold exchange.

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