Gold Industry Besieged With Challenges

The Indian government’s policies towards gold will make or break the industry. Bullion industry expert sanjiv arole studies the impact of factors such as demonetisation, Brexit, Trump, GST and more.

In 1984, the Australian cricket team lost the services of Greg Chappell, Denis Lillie and Rod Marsh together as they retired from Test cricket. It took the Australian team more than a decade to regain its lost glory under the stewardship of Steve Waugh. Similarly, the great West Indian cricket team that dominated world cricket for over 15 years from the mid-1970s, went sliding downhill after the retirement of their famed pace attack (Roberts, Holding, Marshall, Garner, etc) as well as Vivian Richards. They are yet to get back to their glory days and are still sliding downhill even after almost 30 years.

Likewise, the Indian gold market got its first severe jolt with the introduction of the Gold Control Act in 1962. Prior to that, the Bombay Bullion Association gold price was quoted even in the London bullion market. There was a thriving derivatives market in precious metals (gold) and the turnover on the commodity exchange was even more than that on the BSE. The Gold Control Act pushed back the gold trade by almost 30 years. During that period, gold was available in the country only via the illegal route (only smuggled gold was seen).

After the Act was repealed in 1990, the gold market limped back to normal and was thriving into a robust gold market with successive governments opening up the trade with a series of reforms. So much so that India became the largest consumer of gold and it even was moving up the ladder as far as export of gold jewellery was concerned.