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What benefits would gold deposit scheme, add to gold ETFs?

http://www.personalfn.com/knowledge-center/gold/views-on-news/13-02-18/what_benefits_wo...

What benefits would gold deposit scheme, add to gold ETFs?
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(18-Feb-2013 )

Last week we apprised you about the recommendations made by Reserve Bank of India's (RBI) working group, on gold monetisation, aimed at moderating gold import demand and encouraging financial savings in the economy. And now moving a step closer to recommendation made by RBI's working group, the Securities and Exchange Board of India (SEBI) has permitted Gold Exchange Traded Funds (Gold ETFs) to invest in Gold Deposit Schemes (GDS) of banks, subject to limit of 20% of the total asset base of the scheme. System and process instilled: For investing in GDS, according to SEBI, mutual fund houses will have to put in place a written policy whereby due approval from the board of the Asset Management Company (AMC) and the Trustees for each investment proposal in GDS of any bank will be needed, and such policy will be required to be reviewed by mutual funds at least once a year. So, what benefits would GDS add to gold ETFs? We are of the view that, GDS is expected to supplement the following benefits to gold ETFs and its investors: May help in reduction of expense ratio Enable returns of gold ETFs to inch-up Lure investor to invest in gold ETFs Enable gold ETFs lend their idle gold From a macroeconomic perspective, the benefits for the country are: Help in reducing physical demand for gold Reduce current account deficit (CAD) (which at present has put the country to risk of ratings downgrade as concern over the twin deficit problem (occurred by widening CAD and ballooning fiscal deficit) persists) Facilitate banks to lend gold to jewellers Encourage financial savings It is noteworthy that according to the World Gold Council, total gold demand in India in 2012 was around 864.2 tonnes, of this jewellery demand stood at 552 tonnes and investment demand at 312 tonnes. But with such a step and chances of introduction of other gold-backed financial products too being considered, financial savings may now gradually elevate.
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4/21/2013 8:37 AM

What benefits would gold deposit scheme, add to gold ETFs?

http://www.personalfn.com/knowledge-center/gold/views-on-news/13-02-18/what_benefits_wo...

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4/21/2013 8:37 AM