The trend and future of Gold coin trading in India with respect to the Banking Industry. India is one of the countries in the world where buying of gold is a tradition, gold commodities are bought and sold in a vast quantity. The investments in gold are useful in the period of difficulties, problems, emergencies, mortgages for getting loan, quick amount for medical treatment, marriages, plans about house, purchasing any commodity, education of children etc. Gold has greater liquidity hence, it reduces risk and owing to its ever increasing rates, it is the one amongst the best form of investment in terms of returns.
Gold is a weapon against inflation and a saviour during recession. Gold, having a high value to weight ratio, is easily transportable compared to many other commodities. One of the factors increasing its value is its scarcity and ever increasing demand. The real fact of economy is people never stop buying gold may it be an up or down in the market. India, being the largest importer of the metal, accounts for over 20% of the global demand for gold. As much as 200 tons of gold bars and coins are traded in a year, but only 10% of it is accounted for by banks, the rest is accounted by the local gold traders and vendors .
Gold coins are the hottest commodity in India these days. The fact that the price of gold rose steadily by around 300% from 4395 in 2000 to 16800 in 2010 is attracting more and more customers for investment. These non-perishable items are sold like hot cakes during festivals. Indian banks started trading in gold coins in 2004. They are sold in different denominations like 0. 5 gm, 1 gm, 2 gm, 2. 5 gm, 5 gm, 8 gm, 10 gm, 20 gm, 50 gm and 100gm. Even though investment-led demand accounts for 30 percent of gold sales, it is growing faster than the jewellery segment.
Many Indians these days prefer gold coins and bars as investment options. The customer preference of gold buyers in India is changing fast. All these years, buying gold jewellery items were considered the best investment option. But these days, people are shifting from buying gold jewellery to gold coins. The fact that gold coins do not attract making charges lure people to buy them. One of the main reasons for people buying gold coins is that they are safe to handle. Gold coins are something that has been around for a long time and people have a lot of confidence in them. These coins are works of art.
And they are something that can last forever. India’s gold market typically sees the strongest demand in the August-to-November festival season, which includes festivals such as Diwali, Dhanteras Id etc. This year’s demand for gold has been stronger than in 2009. Demand for gold increased by 84 per cent in India over the course of last year, according to recent figures from the South Africa Gold Coin Exchange. Banks, brokerage houses and post offices across India are promoting the sale of gold coins, thanks to the new-found fascination that bullion buying customers have to gold coins.
During the ongoing Diwali religious festival season, gold coins buying has been going on at a brisk pace. While banks are competing with each other to open counters in their branches to sell gold coins, the postal department in association with brokerage firm Reliance Money and the World Gold Council (WGC) has been introducing novel schemes to sell coins through post offices. This year, banks are also in the forefront promoting the sale of gold bars and gold coins in India.
HDFC Bank sells the 24K HDFC Bank Mudra Pure Gold Bar from 1400 branches. Punjab National Bank plans to sell from its 267 core banking solution branches. State Bank of India has especially established a ‘sona ghar’ to sell gold coins and is planning to increase its current no. of branches from 518 to 1100. Bank of Baroda sells from its 250 branches and provides an online facility to locate a nearest branch near you. Axis bank sells Mohur gold bars from its 850 branches. ICICI also sells gold through its branches. Majority of