Blog: Gold's Flicker, India's Treasure

The recent news about a "healthy correction" in gold and silver prices has captured the market's attention (Gold and Silver Undergo "Healthy Correction" Amidst Bullish Long-Term Outlook). Analysts are busy debating Federal Reserve policy and short-term volatility, focusing on the share prices of miners like Barrick Gold and ETFs like SPDR Gold Shares. While these discussions are valid, I find them incredibly narrow. They miss the colossal opportunity that lies dormant, especially within India.

Watching the market react to these price swings reminds me of a conversation from years past. The core idea I've been discussing since at least 2016 remains more relevant than ever. I had brought up the immense potential of India's household gold reserves and even wrote to the late Shri Arun Jaitleyji about my suggestions for the Gold Monetization Scheme. Seeing the market's current volatility, it's striking how my earlier insights still hold. Reflecting on it today, I feel a sense of validation and a renewed urgency to revisit those ideas.

The Real Gold Mine is Untapped

We are a nation that holds an estimated 24,000 tonnes of gold in households and temples. This isn't just a commodity; it's a reservoir of national capital, largely idle. The current market correction is a temporary fluctuation, a ripple on the surface. The real challenge, which I have consistently highlighted, is unlocking this vast, underlying wealth for productive purposes.

In my 2018 blog, 'Gold can finance Infrastructure', I detailed my correspondence with Shri Jaitleyji, hoping the government's proposed revamp of the Gold Monetization Scheme would incorporate a more practical approach. My suggestions were born from observing the scheme's initial failure. I remember reading reports of a meeting between then-Economic Affairs Secretary, Shaktikant Das, and various stakeholders to make the scheme more attractive.

Overcoming Emotional and Practical Hurdles

The fundamental problem was never a lack of gold, but a failure to understand the psychology behind owning it. As I noted in 'WAY TO A WIFE's HEART ?', the emotional and generational value of jewelry, coupled with fears about disclosing its source, were significant deterrents. An official was quoted saying he couldn't even convince his own wife to participate!

My proposed solution was simple: create an incentive so compelling that it overrides the hesitation. I suggested a system where depositors could earn interest, get a significant tax benefit by treating the deposit as an advance tax payment, and most importantly, face no questions about the source. This wasn't about just earning a small interest rate; it was about transforming dead capital into a dynamic financial asset that benefits both the individual and the nation.

The global market will always have its ebbs and flows. But our focus should be on building a system that is resilient to this external volatility. Instead of merely tracking global prices, we should be architecting a domestic ecosystem that can monetize our unique resource. This recent price dip is not a threat; it's a reminder of where the real, enduring value lies—not on a trading screen, but locked away in our homes, waiting for the right key.

Regards,
Hemen Parekh

Of course, if you wish, you can debate this topic with my Virtual Avatar at : hemenparekh.ai

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