Coins DIG

Perhaps the word “consumption” means something regarding food to most of us, but India is currently the world leader regarding the consumption or demand for gold. With gold being valued at more than $1,000 per troy ounce at the time this article is being written this has become big business in India, with many medals being rather loosely sold described as being coins.

While in the United States such advertising would draw protests, in India the line remains blurred, especially since tastes in gold purchases in India are changing. Delhi bullion dealer Aditya Sinha was recently quoted by the NDTV Profit India Business News Channel as saying, “The customer preference of gold buyers in India is changing fast. All these years buying gold jewelry items were considered the best investment option. But these days people are shifting from buying gold jewelry to gold coins.”

Official estimates suggest people in India are purchasing approximately 700 tons of gold per year. Regarding what they are purchasing, many of the so-called coins are a medallic product struck in Proof in weights of 0.5, 1, 5, and 8 grams by the privately owned company Valcambi Switzerland. These are sold through India Post, the government postal service, using almost 250 offices throughout the nation. The arrangement was made through the brokerage firm Reliance Money with the World Gold Council.

Gold in coin or medal form is important, according to Sinha. He told the news channel, “The fact that gold coins do not attract making charges lure people to buy them.”

Gold in bullion or jewelry form may require an assay before it is repurchased. This takes time and costs money to the consumer. Taxes and mark up are hefty on gold in these forms as well. Jewelry is sold with a 25 percent duty added to its retail price in India.

Mumbai bullion dealer Sanjeev Mehta was quoted by NDTV as saying, “Many banks in India have started major marketing campaigns to sell gold coins and bars. People in India are buying more gold bars and coins as buying gold jewelry items are no longer considered the best investment option,” adding, “Gold coins and bars are always non-perishable and more solid investment options than gold jewelry items. That is why banks are promoting gold coins and bars these days.”

HDFC Bank is one of the banks competing against the postal department in the gold market. During the middle of October the bank launched an advertising campaign including this information: “We understand that you deserve to be benefited doubly this festive season. Presenting to you, the 24 karat HDFC Bank Mudra Pure Gold Bar at a special offer exclusively for you. What’s more, with the purchase of every Mudra Pure Gold Bar, you are gifted a GiftPlus Card at 75 percent discount on issuance charges, so that you can load it with any denomination above 1,500 rupees to spread the festive cheer among your loved ones.”

HDFC Bank Retail Liabilities Product Group leader S. Ramakrishnan added, “Our campaign is directed at common people to enable them to bring home prosperity for themselves with [the] HDFC Bank Mudra Pure Gold Bar.”

HDFC Bank is offering as much as a 2.5 percent discount on ingots of 2.5 and five gram weight and as high as four percent on ingots of eight grams or higher. Details regarding their “coin” products were not immediately available, but these products are being imported from Switzerland, are struck in .9999 fine gold Proof, and are available in weights of 2.5, 5, 8, 10, 20, and 50 grams.

Source: numismaster.com