Indians Refuse To Give Their Gold To The Government: Only 30 Kilograms Take Part In “Gold Monetization Scheme”…(LOL!!)
by Tyler Durden
ZeroHedge.com
11/18/2015
Two months ago we gave our most recent review of what we dubbed the soft launch of India’s gold confiscation program, when the government’s “voluntary“gold-to-paper backed bonds conversion went, well, gold: back then, Modi’s government approved the gold monetization plan and sale of sovereign bonds proposed several months ago by the Reserve Bank of India.
The plans were first announced by Finance Minister Arun Jaitley in February as measures to woo Indians away from physical gold. As Jaitley explained the deposited gold would be auctioned, used to replenish the Reserve Bank of India’s reserves or be lent to jewelers. Subsequently, gold “depositors” can redeem in gold or cash depending on the tenure. Said otherwise, an attempt to “fractionally-reserve” gold, which would then be used a source of gold rehypothecation in the country that despite all the government’s efforts, remains starved for physical gold.
Now, one week after the gold scheme’s official launch, we take a look at how has it has done so far. In one word, so far the “gold monetization” plan has been a disaster with a laughable 30 kilograms in gold tendered by the people from physical into “government-backed” form.
The Times of India has the details, and reports that in the first-week “collection by the government’s sovereign gold bond scheme has been rather tepid with less than Rs 10 crore being reported to the Reserve Bank of India (RBI). The scheme, which closes on November 20, allows investors to purchase between 2 and 500 grams of gold-equivalent.
The spin was immediate: “bankers say that in any issue, savvy investors – including high net worth individuals – usually hold off until the closing date before locking in their funds.” Or maybe they don’t lock in their funds at all since giving the government your physical gold in exchange for a interest payment – in other words, converting gold into a paper asset with the government’s blessing – is about as stupid as it gets.
TofI adds that “the money raised through the sale of these bonds will form a part of government borrowing. According to sources, the RBI, which manages government borrowings, is keeping track of the collections and it has got a number of below Rs 8 crore until last weekend. Of this, around Rs 6.5 crore has been reported by banks and another Rs 1.35 crore by the Post Office. The government has fixed the issue price at Rs 2,684 per gram, which means that the gold-equivalent of the bonds is less than 30kg.”
The Rest…HERE
