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Gold paperization in India won't be happening any time soon
4:30p ET Sunday, May 3, 2015
Dear Friend of GATA and Gold:
Writing today in The Hindu, the second-largest English-language newspaper in India, published in Chennai (formerly Madras), former Indian government official Sutanu Behuria explains why the sort of monetization -- paperization, actually -- recently proposed by the country's government for the vast amount of gold held by the Indian public is not going to happen any time soon.
It's not just because of the centrality of gold in Indian culture and religion, Behuria writes. It's because the country lacks the infrastructure that would be necessary to standardize and evaluate any gold submitted for monetization.
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"Previous gold monetization schemes," Behuria notes, "have had very little success. The 1999 gold deposit scheme could not achieve even a conservative target of 50 tonnes. A major reason for the failure has been the inherent distrust in the credibility of the valuation process, besides the reluctance on the part of individuals to disclose gold assets for fear of attracting punitive levies. ...
"The only way to accurately determine gold content in jewellery is to melt it and then draw a representative sample for testing. Such purity verification infrastructure is almost nonexistent in India. The assaying and hallmarking of handmade gold jewellery is at best a misplaced assurance prone to substantial misinterpretation. Further, given the size of the country and the widespread demand for gold in the form of jewellery, even such infrastructure as is available is woefully inadequate. ...
"Successful implementation and operationalization of the gold monetization scheme would necessarily require 1) a national network of purity verification centers, 2) world-class refining and fabrication facilities, and 3) secure storage and distribution facilities. In addition, details of interest to be paid, tenure of the deposit, collateralized lending, and so on will have to be worked out.
"It is likely that it will take considerable time to put the architecture in place."
Behuria's commentary is rather misleadingly headlined "All That Glitters Is Not Gold" and it's posted at The Hindu's Internet site here:
http://www.thehindubusinessline.com/opinion/columns/all-that-glitters-is...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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