by Louis Cammarosano, Smaulgld:
India’s plan aims to reduce gold demand in physical form.
The Indian Goverment will entice its citizens to turn their gold in exchange for interest bearing Sovereign Gold Bonds.
Will it work?
India Plans To Wrest the Gold From its Citizens
It is estimated that Indian households are in possession of over 20,000 tonnes of gold. The Indian goverment itself has under 600 tonnes. India plans to monetize some of its citizen’s gold under a plan recently passed by the Indian government. They hope to entice Indians to turn in some of their gold for interest bearing bonds. It won’t be easy.
In the west, incessant gold bashing in the main stream media – it doesn’t pay interest, it’snot a safe haven, it’s a pet rock and it’s a 5,000 year old bubble – have helped relegate gold to an often derided, out of favor and under owned asset.
Indian gold demand remains near an all time as an increasing population with growing incomes continues to clamor for gold.
Central bankers don’t like gold as it disrupts their central planning and economic interventions. Gold threatens to undermine national fiat currencies as it is not based on the sustained confidence of issuing nations and their central banks’ monetary policies.
As we wrote in “Gold vs. World Currencies“:
Gold doesn’t default, threaten to default, change governments, debase, or stimulate. Gold conducts no monetary policy. Gold simply is. It stands at the center of fiat currency experiments, all of which have failed in the past to dethrone gold as the world’s most valuable and lasting currency.
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