NCDEX launches forward contracts to mobilise recycled gold

Thursday, May 28, 2015,21:15 IST By metrovaartha A A A

New Delhi | To bring idle gold into the market, NCDEX today launched forward trading contracts called ‘Gold Now’ in 1 kg and 100 grams gold bars including the recycled ones. The new forward gold contracts will not only give impetus to the Indian gold refinery industry, but also complement the government’s proposed Gold Monetisation Scheme (GMS) and ‘Make in India’ programme, it added.
We have launched two contracts — 100 grams and 1 kg gold bar contracts. We intend to offer contracts in 5 gram, 10 gram and 50 grams coins in the next six months, NCDEX Managing Director and CEO told reporters here. Under ‘Gold Now’ contracts, one can trade in ‘imported gold’ accredited by the London Bullion Market Association (LBMA) as well as recycled ‘India gold’ from domestic refineries, he said.
Under these contracts, gold will be compulsorily delivered to buyers from six centres — Delhi, Ahmedabad, Mumbai, Kochi, Hyderabad and Chennai. To ensure quality of recycled domestic gold, NCDEX has accredited four domestic refineries — MMTC Pamp, Kundan, Shirpur Gold Refinery and Edelweiss Gold Refinery as ‘Good Delivery’ gold refiners on the exchange platform, he added.
Stating that the ‘Gold Now’ contracts perfectly complement the government’s proposed Gold Monetisation Scheme (GMS), Shah said, When you open a gold deposit account under the proposed GMS, you will get a fixed rate of 1 per cent. But on the exchange platform, returns are driven by the market.
One may get 5-6 per cent returns. That apart, the new initiative will help mobilise ‘Make in India’ gold by linking up the entire domestic gold recycling industry and help bring an estimated 25,000 tonnes of idle gold into the market, he added. We need to create lot of awareness in the market. Hopefully, if we get 5 per cent of an estimated 25,000 tonnes of idle gold, you can imagine the impact it will have in reducing imports, Shah said.
The gold demand in India, the world’s largest consumer, will not not come down. The supply side can be addressed by mobilising the idle gold, he added. NCDEX, which has huge presence in agriculture commodities, is also offering ‘Gold Hedge’ and ‘Gold Futures’ contracts to importers and local jewellers, respectively.