Regering India snapt niet waarom mensen goud kopen

The Government of India has not understood why people buy gold, because after three years we can see that the programs to discourage the possession of gold are in a very good way .Total failure have run out.

To reduce the demand for gold, the Indian government launched new gold bonds three years ago , an eight-year investment product that pays out interest every year. These gold bonds were sold by banks, but apparently they were not waiting for them either.

A recent research among a thousand Indians, it turned out that less than 1% of the population was aware of this investment product. It is therefore not interesting for investors to put money into this bond, because there is virtually no market for it. So you have to serve the full term of eight years before you get the investment back. That's why almost everyone prefers  Buy physical gold, because you can sell it anywhere at any time. Even without the intervention of a bank.

Surrendering gold

The second program launched by the Indian government to discourage gold buying is the 'Gold Monetisation Scheme', which allows consumers to deposit their gold with the bank in exchange for an interest rate of a few percent. The idea behind this program is that people hand in their gold and that banks can sell it on to gold dealers and jewellers.

This project also turned out to be a big failure, because many Indians are very attached to their gold. Of India's 24,000 tonnes of private gold deposits, the majority consists of jewellery and ornaments with emotional value. Because the returned gold is immediately melted down, there was very little interest.

In addition, the interest rate of 2 to 3 percent was far too little to convince people. In the end, only 6.41 tonnes of gold were surrendered, a fraction of the nearly 600 tonnes of precious metal that India has to import from abroad every year to meet domestic demand.

A survey of 61,000 households found that Indians do not want to part with their gold because they see it as a form of wealth preservation. A potential increase in value and the liquidity of the precious metal are also cited as reasons for preferring the private ownership of gold to a derivative investment product of the bank.

Saving in gold

In many Asian countries , physical gold means the same thing as what the savings account is to us. People don't buy gold to speculate with, but as a kind of apple for the thirst. For Indians, it does not make sense to put the security of physical gold ownership in the hands of banks and governments for a negligible return.

At Hollandgold, we also believe in the value of the physical possession of gold, because this is one of the few ways to store part of your wealth outside the financial system and without counterparty risk. In this respect, we can take an example from Indian savers, who know what inflation does to the purchasing power of money.

Indians only want to buy physical gold (Photo via Pixabay)