Gold-Monetization-Scheme YouTube Lecture Handouts
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Gold Monetization Scheme & Sovereign Gold Bond Scheme (4 Tranches) - IAS GS 2016
Gold Monetization Scheme & Sovereign Gold Bonds
βAll That Glitters is Not GOLDβ if Kept IDLE
Global Scenario - Bullish GOLD
- Current stock market recovery in the U. S. may be nearing its peak
- Change in US presidency - threat to global financial stability - time to buy gold
- When demand for dollars falls, investors park their money in gold & increase value
- Fears of a collapse in the Eurozone, even after Greece brokered debt deal in May
- Possible Impact of Brexit on the wider European economy
- Market uncertainty and expansionary monetary policies
- Concerns over negative interest rate policies by central banks in Europe and Japan
- Demand for gold typically climbs when interest rates are low
- Risk of collapse of large global banks and geo political risks
- Gold mine supply peaked in 2016 but might enter decline in 2017 and 2018
Need for GMS
Idea Behind GMS
Short Term β 1 - 3 Years (By individual banks)
Middle Term β 5 - 7 Years (By Banks on Behalf of GoI β notified by RBI)
Long Term β 12 - 15 Years (By Banks on Behalf of GoI β notified by RBI)
Aims and Objectives of GMS
- Mobilize gold held by household & institutions
- Reduce gold import and meet Current Account Deficit
- Gold to be available as raw material on loan from the banks
- Improve market liquidity
- Convert gold into a performing asset
Benefits of GMS
- Benefit to Customers
- Benefit to Government
- Tax Benefits
Disadvantages of GMS
Challenges Faced by GMS
Sovereign Gold Bonds
Price of bond will be fixed in Indian Rupees based on previous weekΥs (Monday β Friday) simple average price for gold of 999 purity published by the India Bullion and Jewellers Association Ltd. (IBJA) . The issue price will be disseminated by RBI.
Price will be published on RBI website 2 days before scheme opens
Interest on the Bonds will be taxable as per Income-tax Act, 1961 (43 of 1961) . Capital gains tax treatment will be the same as that for physical gold.
β Manishika