Monday, January 11, 2016
Recycling gold looks set to be a major trend to watch in 2016.
India, which is a key international gold bullion market ranking second only to China for the volume of the precious metal it buys, has been attempting to reduce the amount of gold it imports.
As we reported in December, the Indian government has already monetised gold and introduced sovereign bond schemes as part of a wider initiative to persuade people not to hoard gold supplies. It is aiming to reduce the amount of gold imported into India, and the push to recycle more ‘scrap’ gold is part of this effort.
The country now has five gold recycling centres. Muthoot Exim, the precious metals division of the established business group Muthoot Pappachan, aims to be operating 16 Muthoot Gold Point centres by the end of next year and has set a target of recycling two tonnes of scrap gold by 2018.
The centres buy old and broken gold jewellery and other items from the public. The metal is refined before being recycled into bullion bars to be sold to investors within India.
Keyur Shah, CEO of Muthoot Precious Metals division, said: “Muthoot Gold Point has a strategic significant importance, as it aligns with Government's objectives and supreme priority of keeping Current Account Deficit (CAD) under control, by garnering and channelising domestic unused gold to productive use and also to provide a standardised, transparent and scientific platform to end customers to sell their gold.”
The first of the new centres was opened in Bhowanipur in Kolkata, and a further two are earmarked to be operational by March this year.
Until the business group opened its first recycling centre, the practice was mainly carried out on an unregulated basis.
The new centres are part of a pattern to offer greater transparency in the Indian gold market. The market also expects to see the opening of its first physical gold exchange this year, which will regulate gold buying and selling.