Thursday, March 24, 2005

India Gold Exchange Traded Funds

The Indian Government with the introduction of Gold Exchange Traded Funds (GETF) intendeds to attract investments in gold from other sectors and tap into the 15,000 tonnes of gold, mainly in the form of gold jewellery and gold coins accumulated by households over generations, for so called "productive purposes".

However, "Gold is more than a metal in India. It's a culture. It's a part of life," said Ranjeeth Rathod, a bullion dealer.

"And if a gold scheme takes away that culture from the Indian community, I don't know how successful the scheme would be."

Gold exchange traded funds, commonly known as "paper gold" are traded like stocks and holders are not required to physically buy gold. The value of the unit changes with the gold price.

India, with more than 1 billion people, imports about two-thirds of its annual gold demand of up to 700 tonnes. Gold jewellery and gold coins account for 85 percent of India's gold demand.