goldsilverworlds.com / By Gold Silver Worlds / February 6, 2013
Western countries are still struggling to see the benefits of owning gold in physical form, at least on a large scale. If we want a taste of the coming gold mania in the West, we could look at the East, where people have been rushing into physical gold, especially in India and China. Ironically, just at the time when Indian rush for gold to protect themselves against the damaging effects of the (central) banking system, their very central bank tries to seduce the people to transfer their physical gold into the banks and slow the import of physical gold.
India has traditionally been the largest consumer and importer of gold. Some 20,000 tonnes of gold is held by households currently. To put that figure into perspective, the largest central bank reserve worldwide is held by the US and totals slightly more than 7,000 tonnes. Total above the ground gold existing on the world is some 165,000 tonnes.
The real objective of the Reserve Bank of India (RBI) is to profit from the gold rush in an attempt to decrease their current account deficits. Reuters reported today that the Reserve Bank of India (RBI) plans to:
- moderate the demand for gold imports
- introduce several gold-based investment products, in order to transfer household’s gold into the banking system
- implement measures to increase the monetisation of (the stock of) gold, mainly by setting up some sort of gold bank / institution.
RBI published a report on their website which presents in a detailed way the proposed measures from their internal working group. Several interesting charts show the magnitude of the gold market in India … and the potential profits for the central bank and banking system were they to implement their measures. Interestingly, the Indian gold imports as a ratio to their GDP stands at 3% approximately.