Gold Banking
The main developers of banking in England were goldsmiths, who transformed from artisans to taking deposits of precious metals holdings. Gold has also a key basis for the birth of the fiat currencies and most currencies were initially backed by this precious metal. However, since then banking has long shun its roots and now concentrates purely on increasingly complex financial products. In a country like India still having heavy private reserves and an investment appetite in this precious metal, banks and financial institutions have long ignored this precious commodity. During recent years however banks and NBFC’s have introduced sales of coins and jewel backed loans.
However, these initiatives don’t even dent the surface of the huge domestic jewellery market for these NBFC’s and Banks do not sell jewellery, nor do they provide buy back, prevented from doing so by strict guidelines by the RBI, the Indian Central Bank. If the Indian government then complains about huge wealth locked up in jewellery in India, it can’t blame the people. Sensing the gold frenzy in the Indian psyche it should have long introduced gold based financial paper and physical products through banks and other financial institutions.
Swiss banks used to offer metal accounts to users, accepting scrap old jewellery and cash as deposits, while offering coins and bullion biscuits for sale. Such services in India could unlock the wealth hidden in private reserves and prevent the losses incurred by millions of users at the hands of unscrupulous jewellers. However, with no reform in sight enabling financial institutions to offer such services, and thick jurisdiction making it very hard for new financial institutions to start, it is up to the private players to take the initiative in enabling such reforms. Western countries though having a much smaller jewellery industry have a strong buy back industry enabled by refineries, pawn shops, etc. where people can easily and comfortably sell their precious metal assets in ease comfortable in the knowledge that they are getting the best prices for their precious jewels. Even leaving aside the scope for financial products based on precious metals and jewels, even basic liquidation services like pawn shops can greatly improve the confidence of consumers selling their unused jewels.
Jewels Capital which aims to provide such services for people looking at investing or selling in precious metals in Delhi. Hopefully, more of such players will enter the market creating a new ecosystem of such services not just in urban cities like Delhi, but also Tier 2 and 3 cities and rural areas. You can find more information and contact details about Jewels Capital here: Jewelscapital.com
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