Gold coins buying spree grips India

February 20, 2009

Commodity Online
MUMBAI: Gold coins are the hottest commodity in India these days. Even as the price of gold continues to rise, sale of gold coins are taking place at brisk pace through banks, equity and commodity broking companies, finance firms and post offices across India.

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As spot gold prices in India shot up to Rs 15,700 per ten grams this week in bullion market, there was a rush for gold coin sales. “We are selling around five kgs of gold coins every day. The gold coins sales are going up day by day. People in India who have been fond of buying gold jewellery are buying more gold coins as safe investment,” says Sudip Bandopadhyay, CEO of Reliance Money, one of the largest stock and commodities brokerage houses in India.

According to him, earlier gold sales were happening around festivals like Akshay Trithiya. “But after we introduced gold coins of small denominations like 0.5 grams and 1 grams with 999 purity coins, the sale of gold coins have gone up,” the Reliance Money chief added.

Reliance Money has partnered with World Gold Council and India Post, the postal services arm of India’s postal department, to sell gold coins across the post offices. The scheme offers 24-c gold coins in 0.5g, 1.5g and 8g varieties and people can buy gold coins through post offices.

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Each coin comes with certification from Valcambi Switzerland and quality packaging, as well as a number and assayer certificate. The gold coins are packed in a sealed cover with the certification from Valcambi, Switzerland with the India Post logo.

India Post is offering 5% special discount to its customers during this festive season which will be valid up till the end of the current month.

India Post, considering the demand from its customers, has taken the initiative to keep post offices open on the festival day to sell gold coins to interested customers.

The Department of Posts has been selling 24 carat ‘Gold Coins’ through select Post Offices effective from 15th October 2008. Apart from enhancing the revenue of the Department, this has enabled India Post to usher in a new image of India Post as a modern and relevant organization in all areas of life.

Small investors are buying gold coins from post office for two obvious reasons. First, the gold coin prices are low as compared to other suppliers. This makes the service very competitive and economical. Second, Post Office is focusing on the low-end denominations like 0.5 gm., 1 gm., 5 gm., and 8 gm making them more accessible.

Gold is the latest addition to a range of retail activity that India Post has already taken up. India Post has been selling various products under Retail Post category and there is sustained growth in the revenue from these activities. Post Office sells UPSC applications and university applications, it retails Darjeeling Tea in West Bengal, it markets Aloe Vera products in Gujarat and it takes orders for distribution of Prasadams of various temples in Andhra Pradesh and Kerala.

Earlier this month, India Post also announced the Gold Accumulation Plan (GAP) carried out through its wide postal networks across the country.

As per GAP, customers can purchase gold coins from any India Post offices across nine states in the country. The GAP project ensures that people have the options like the Systematic Investment Plans of investing in gold by accumulating small quantities of the yellow metal.

Several banks in India have also launched innovative gold coin schemes to attract buyers. Says a statement from Bank of Baroda, one of the oldest banks in India: “Bank of Baroda offers sale of 24 Karat 999.9 pure Swiss made gold coins with Assay Certification in the denomination of 2, 4, 5 & 8 grams in round shape and 10 grams bar.”

Bank of Baroda offers gold coins in grams of two, four, five, eight and ten priced at Rs Rs.3527, Rs.6915, Rs.8758, Rs.13767 and Rs.17256 respectively.

Other banks that are aggressively promoting the gold coin sales in India are HDFC Bank, ICICI Bank, State Bank of India and Federal Bank. “Lots of people are coming these days to buy gold coins to our bank branches. Sometimes, we have met with shortage of gold coins because of the rush from investors,” said a Federal Bank manager.

Commodity broking houses that are promoting gold coin sales say falling stock markets are prompting them to offer innovative schemes to clients. JRG Wealth Management, a leading commodity broking house in South India, has launched a Gold Investment Scheme that allows the company’s employees and clients to buy gold coins of eight grams by paying monthly installment.

”We are promoting gold coins as a solid investment to our clients and among our employees also. Clients and employees need not pay upfront to buy gold. Instead, they can buy gold by paying money in monthly installments. We are selling a good quantity of gold coins through this scheme,” Giby Mathew, Managing Director, JRG Wealth Management said.

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