In India, digital gold sellers hope trickle will become a rush
In India, digital gold sellers hope trickle will become a rush
Digital payment systems have ballooned in popularity in India since the government scrapped large-value bank notes in 2016.
Among these offerings are applications that enable smartphone users to buy, sell or store gold — even in small amounts — kept in secured vaults operated by MMTC-PAMP India Pvt Ltd, a joint venture between MMTC Ltd, the largest national trading firm, and Swiss gold refiner PAMP.
Although online gold purchases have been growing globally for years, they are a relatively recent phenomenon in India, where jewelry and bars of the precious metal tend to be kept in hand and given as gifts.
“In India, the action is really starting now. The digitization of the economy will certainly lead to digitization of gold,” said Somasundaram PR, managing director of World Gold Council’s (WGC) India operations. “It is poised for significant growth, possibly in the next 12-24 months.”
The WGC estimated total Indian gold demand at 727 tons in 2017, and could be up to 800 tons in 2018. In China, the top consumer, 2017 demand was 953.3 tons.
It is difficult to gauge how many new buyers are entering the market because of online access. The e-wallet operator Paytm said that in the first six months after it began offering digital gold last April, it facilitated about $18.4 million worth of sales — a tiny fraction of the Indian gold market.
With the vast majority of purchases made in the traditional way, demand for physical gold isn’t abating, “especially when physical gold plays an important role at Indian weddings,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd.
Besides convenience, Indian consumers are attracted to competitive pricing and ability to make purchases in tiny increments.
Gold-based financial offerings, including Gold Accumulation Plans (GAPs), allow users to buy and store gold in fractions as small as 0.1 grams — an amount that would be an uneconomical to trade physically because of the associated handling costs.
These accumulation plans, along with gold-backed bonds and websites selling coins and jewelry that can be shipped for free or cheaply within India, are especially appealing to young Indians. In the past, even those with an enduring affinity for gold have needed to wait until they have saved enough to build holdings.
Joe Jacob, a 29-year-old entrepreneur in the southern city of Bengaluru, recently bought 5 rupees (8 cents) worth of digital gold as a “trial investment.”
“Physical gold is a hassle in terms of storage, and I don’t wear gold, but understand it is an asset to hold. Digital gold is better than storing the actual metal at home, worrying about its safety,” he said.
Security experts said that because the gold, guaranteed to physically exist in an MMTC PAMP vault, was insured, there was little risk of fraudulent sales.
And digital wallet providers expect interest to grow.
Paytm leads the crowded e-wallet space in India and announced two new gold gift and savings plans this month after launching its first digital gold product in April 2017. The company, backed by Japan’s SoftBank Group and China’s Alibaba, sources its 24-carat gold from MMTC PAMP.
“There is no ‘season’ for this product; it is running twenty-four seven. Sitting in their offices, homes or wherever they want, they can easily access, buy sell or redeem,” said Gaurav Singh, deputy general manager of marketing at MMTC PAMP.
Gold trading traditionally peaks around festival and wedding seasons, experts say.
But Singh added that because digital gold lowers the minimum price needed to buy gold — from about 3,000 rupees previously, enough to buy roughly 1 gram of gold at current prices — and boosts market transparency via live pricing, there has been a rise in the frequency of gold purchases at other times of the year.
Nitin Misra, senior vice president at Paytm confirmed a similar trend, noting “about 40 percent of sales” happen during the “off-season” for buying gold in India.
He said more than half of the company’s users were repeat customers, and 70 percent were younger than 35. As of December 2017, about 1.4 million of its customers held some gold balance in their e-accounts.
“We have stumbled upon a brand new segment,” he said of younger users buying gold. “What we have done, is not cannibalize the existing market, but grown it.”
The company said last year it planned to sell $200 million worth of gold in the 2017 fiscal year, which ended March 1. But its reported sales in 2017 appeared to be headed far short of that number.
Its rival e-wallet provider PhonePe was upbeat.
“The gold consumption market is expected to grow by 35 percent from 2015 to 2020, and customers are exploring digital options for purchase,” it said in an emailed statement.
For Bangalore-based P Vinoth, a logistics consultant who still prefers buying ornaments and jewelry from retail stores, e-wallets now offer an alternative.
“For long term, I previously invested in exchange-traded funds. Now I am using Paytm gold,” he said.
Dubai eyes stronger business, investment ties with Egypt
- Dubai’s global reputation as a wealth generator and investment stronghold continues to drive the city’s growth and was a matter of interest to the visiting Egyptian delegates
Dubai has moved to further strengthen the emirate’s business and investment ties with Egypt, following meetings with a high-level Egyptian delegation.
During the discussions held in Dubai, Dubai FDI and Egyptian delegates from the General Authority for Investment and Free Zones appraised the many foreign investments coming into the city as a result of the government’s intensive efforts to create a business-friendly environment.
Dubai FDI (the investment agency of the Dubai Economic Development Department) also took the opportunity to explain its mandate and role in creating a business-appropriate landscape to attract international companies and help stimulate capital growth.
Khalid Al-Boom, Deputy CEO of Dubai FDI, who welcomed the Egyptian officials, said that Dubai and Egypt’s joint efforts and deepening relations constitute a significant boost to the government’s initiative to make Dubai one of the most sustainable and competitive business hubs in the world. Al-Boom also said that the visit would further reinforce government-to-government ties and promote sharing of knowledge of expertise.
He noted that the current favorable business environment would further push a new phase of economic and investment cooperation between the two countries to help realize their growth and development goals.
“We at Dubai FDI are fully committed to continue on the path toward success and optimize Dubai’s transformation and potential to make the emirate’s one of the most stable economies in the Middle East and the world,” he concluded. The Egyptian delegates were introduced to local business, government, and legislative processes and procedures. Dubai FDI officials also discussed promising business opportunities and key services that benefit foreign companies operating in the emirate.
The Dubai Government has rolled out a comprehensive program to help foreign companies interested in starting their business in the city. The visiting delegation toured the Dubai Multi Commodities Center and the Dubai Silicon Oasis Authority, during which they were informed about the institutions’ best practices, development strategies, main service offerings, and major investment opportunities.
Dubai’s global reputation as a wealth generator and investment stronghold continues to drive the city’s growth and was a matter of interest to the visiting Egyptian delegates. They were informed that though Dubai moved away from traditional trading and looked to its natural resources for sustenance in the latter half of the 20th century, revenue from oil was soon complemented and later almost replaced with a knowledge-based and services driven economy.
The innovative businesses which establish themselves in Dubai are supported by the Emirate’s ambition to drive technology, pioneer new innovation and foster thought leadership.
Trade, logistics, financial services, hospitality and tourism, real estate, construction and manufacturing now make up more than 90 percent of business activity in the Emirate.
This diversification, along with Dubai’s strategic location, infrastructure and ease of business philosophy, make it a popular choice for local and international organizations to begin operations and expand into the Middle East.