Sunday, 8 April 2012

Gold Fixed

The crackdown had been unusually stringent and exactly how our previous blog had envisaged. A first commendable action by Pranab da.Both RBI and Finmin had taken several steps notably

1. Raised customs duty on gold imports to 4% from 1% last year. Great step but need to do more, atleast 10-20%

2. Secondary purchases of jewellary to be taxed at 0.3% of value, and brought under the radar of income tax authorities.

3. Gold finance companies to lend only 60pc LTV

4. Reporting of gold imports to become more stringent

These regulations are powerful and completely justified, and most likely should help a bit in freeing our country from this expensive addiction. The country cant afford to indulge in this useless commodity. An interesting afterthought on why RBI is also worried- possibly because every household that stores gold becomes a mini central bank by itself and in a way becomes direct competition to RBI and INR together


Anonymous said...

Btw, this is even more a reason why you should hoard gold. before '71, almost entire fiat issues were backed by gold, now for US, less than 20% of dollar is backed by gold now, to compensate this as well as gain the competitive advantage on exports, they have been using tools like QE to devalue the dollar, which means inflation is exported to rest of the world. As long as that goes, gold will continue to remain attractive. So I would still buy gold as it keeps getting cheaper.

Anonymous said...

Inflation may not find a permanent home anywhere in the world and trust me after the dust settles, inflation will be next big fight for the world. Keynesian will go out of fashion and conservative policies will get a chance. Gold will be the victim of its own greed