Gold remains a good inflation hedge in India

HYDERBAD(Commodity Online): Gold remains a good inflation hedge in India by providing an annual return of 11.2% over a 40 year period from 1970-2010, according to a release prepared by organisers of 3-day Gold Convention 2012 to be held here from Friday.

Returns on gold has outpaced average annual WPI-based inflation (7.4%) on 34 years out of the 40 years span, the organisers quoting Reserve Bank of India data said.

?Thus, gold in Indian rupee terms hasoutperformed WPI-based inflation and has exhibited consistency in delivering returns. This is the fundamental reason for Indian savers propensity to own gold.?

Even though large foreign exchange outgo on importing bullion forced India Government to hike import duty to 4% in view of the mounting fiscal deficit, the government should take the crises as an opportunity to unleash structural and tax reforms in the bullion industry.

The bullion industry strongly believes that bullion imports can be brought down without affecting the supply of bullion into the market through a series of reforms. These reforms include but not limited to permitting the launch of ?Gold Deposit Scheme or Certificate? programmes, and ?Gold Bond Schemes? programmes; permitting export of bullion through banking channels; permitting banks to buy back gold sold by them and to participate in domestic commodity exchanges to offer services to their customers.

The Gold Covention 2012 is being organised by Foretell Business Solutions Pvt Ltd and Bombay Bullion Association.

Source: http://www.commodityonline.com/news/gold-remains-a-good-inflation-hedge-in-india-49896-3-49897.html

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