"Have We Reached The Breaking Point?", page-56

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slange

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13/09/15

07:24

Post #: 15982276
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Originally posted by Dazedandconfused ↑

It will be interesting to see if this scheme attracts many takers. I have my doubts ... it would be a very big turn around on custom.

If it did take off ... what the Indian govt is proposing would create, in effect, a fractional reserve gold banking system which would run in parallel with the Rupee. The Govt clearly proposes to sell the deposited gold back into the market.

Encouraging people to use the gold bonds as collateral for loans would offer all kinds of opportunities for small business entrepreneurs to fund themselves. BUT... it is a massive cultural change of attitude involved to abandon holding physical gold and accept Rupees instead. [It is also an opportunity for people to lose their wealth in failed business ventures]

Although I can see some benefits I wonder how inflationary the scheme might be if it was widely adopted. The gold is handed in by millions of people who begin to receive cash interest payments, some people go on to use the bonds for cash loans and the Government recycles the gold back into the market to replace imported gold. In the beginning the inflationary effect would be small but over several years it would slowly 'snowball' as the same gold cycles through the scheme over and over. Surely it ends up being something similar to the Comex where there are multiple paper claims for each oz of gold?

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The Indian populace is unlikely to trust its government with their laundry never mind their hard earned life savings.
The Indians trust Gold.
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"Have We Reached The Breaking Point?", page-56

Top Stories

Infini soars 50% as company reveals it could’ve just made uranium history – redefining what it means to be “high grade”

Week 28 Wrap: ASX hits all time high; CBA shares' two realities; US inflation hits 3% ahead of China plenum

Nimy to raise $1.21M to explore 'newsy' WA targets

BHP dips as WA nickel suspended after A$6B hit; losses eased by US CPI and forewarning

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SKS Technologies wins US$90M award to supply power to international hyperscale data centre in Melbourne

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Nanocap Middle Island Resources kicks off Barkly copper-gold drill run – a potential IOCG-style NT project

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