Page 11 - Bullion World Issue 7 November 2021

Bullion World | Issue 07 | November 2021
Bullion W
ember 2021
orld | Issue 07 | No
v

it can become one of the greatest discount for a prolonged period of presence of these institutions,
opportunities for India and the time. Although it is less common Indian market would always stay at
region, if the architecture facilitates in gold, it does happen frequently. parity with international markets?
active participation of resident However, the phenomena of The most important component of
Indian in the new ecosystem. discount is more pronounced in success is facilitating free outward
silver. During 2020, when pandemic trade. At present, export of bullion
Let’s digress a moment to review destroyed demand for silver amidst is permitted, but not feasible due
India gold and silver bullion market skyrocketing international prices, to unreasonable value-addition
in the last three to five years. silver prices in India went into deep norms. If accredited refiners be
As dore imports started rising discount (of even 4%) and stayed permitted to export bullion bars
in India, the imports of standard there for almost 7 months from made from recycled gold / silver
gold declined. Currently, dore August till Feb’21. There was hardly at the prevailing market prices and
imports account for 50 to 60% of any imports of silver during that be permitted to deliver these bars
the total gold imports. This trend time. In fact, some of the overseas at IIBX vaults and climb export
is likely to continue as long as the suppliers took back 300 to 400 tons benefits, then these institutions
incentives continue. That would of silver kept in bonded warehouse. would have solved the demand-side
mean, lesser physical gold flows So, to summarise, demand challenges.
through IIBX (as it is expected that seasonality for gold and silver in
all standard gold imports would be India is real and that puts enormous In summary, a two-way trade in
canalised through IIBX). Secondly, challenges to the existing player bullion is a must to make IIBX and
the difference in quantity of gold as they have no other option but its counter-part domestic spot gold
demanded during the season to scale down operations during exchange(s) a resounding success.
and the off-season has widened. such periods. In other words, there This would mean seamless
That is, there is a short burst of is no other market for refiner or integration of these two markets.
demand surge often followed by a bullion dealer, when the demand in That is, enabling companies in
long spell of lull-ness. As a result, domestic market dries up. domestic tariff area access to metal
the business of nominated banks, at most competitive prices and
bullion dealers and wholesalers Let’s come back to our discussion at the same time providing them
has become seasonal with a lot on IIBX. Let’s also add the access to off-share market in the
of unpredictability. The dwindling mirror of IIBX- domestic spot form of IIBX when demand dries in
number of players in each of the gold exchange(s). Would these domestic market or when pricing is
above-mentioned categories is a institutions have made any attractive in off-shore.
proof of the same. There are also difference to the above situation?
times when the domestic market Or what policy tweaks are
goes into discounts and stays in necessary to ensure that in the

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