For Indians, gold is an addiction persisting through ages. Though
the country holds limited natural reserves of gold, the ancient Indians managed
to get it through international trade. The glitter of the yellow metal thus got
to the heart of the Indians.
Even now, gold is an important item every household in the country
aspires to hold. It can be seen in the demand projections made by the World
Gold Council (WGC) for India. According to WGC, by 2020, the Indian gold demand
would be 850-950 tonnes per annum. Already, Indians hold around 24000 tonnes of
gold with them. Making us the largest hoarders of gold in the world.
Of this, majority of the gold remains idle and unproductive in the
form of jewellery. This can be put to productive use through Cash For Gold
services. These services help in solving many of the economic problems of the
country. Here are some problems that can be solved.
#1 Current Account Deficit
Current account indicates the balance of trade. That is the goods
and services exported minus the imports. For India, it is in the deficit. It
means loss of precious foreign exchange in the form of payments to imports. One
of the major contributing factor for this is the import of large quantities of
gold every year.
The current account deficit can be reduced if the gold that is lying
idle is put to use. The cash for gold services are essentially recycling of old
gold. If people start to utilise these services properly, the need for
importing gold reduces and thereby the loss of foreign exchange can be
curtailed.
#2 Cash in Hands
Cash is necessary for everyday purchases. Gold is a better liquidity
option. Through cash for gold service you can immediately liquify your gold
into cash. With enough cash on the hands there will be rise in consumption and
savings in the economy which further helps boost the growth of the economy.
#3 Gold Industry
When people start selling their idle gold, it helps the gold
industry to reduce their costs of operations by reducing the need to import
gold. Also, the gold industry might help boost the economy by increasing
exports of gold jewellery and generating employment.
#4 Industrial Use
Apart from using gold as ornaments and investment instrument, it is
used across industrial applications, especially in electronics. The
manufacturing of these items becomes cost effective if the domestic gold is
used.
#5 Central Bank Reserves
Central Banks world over hold huge quantities of gold as a hedge
against any volatility in the global currency market. They generally do it by
buying gold from gold producing countries. When the gold held by households
come into productive use, the central bank can shore up its reserve by
purchasing gold from the domestic market.
This shows that there is better way to use our idle gold than
hoarding it. If you know more ways to utilise idle gold, please share with us Gold World.
