The Multi Commodity Exchange of India (MCX), the country’s largest commodity bourse, has just launched gold coin futures contracts. Each gold coin weighs just 8 grams!
The Gold Guinea contract will be initially available for delivery in July and August 2008. The contract will be the first of its kind in the country available for retail investors. Maximum order size would be 10 kg with tick size (minimum price movement) of Re 1 per eight grams. The coins will be benchmarked to prices in the Ahmedabad market (inclusive of import duty and excluding sales tax, value-added tax (VAT), octroi and other surcharges).
The contracts have seven delivery centers including Ahmedabad New Delhi, Mumbai, Hyderabad, Bangalore, Chennai and Kolkata. India’s gold coins market is growing at a rapid pace, with more Indians choosing to invest in gold bullion form rather than jewelry. The quality specifications are 995 purity and it should be serially-numbered gold guinea supplied by LBMA-approved suppliers or other suppliers as may be approved by MCX, to be submitted along with suppliers quality certificate.
In 2007, India’s gold demand for investment grew by 10 percent to 215.4 tonnes compared with 195.7 tonnes in 2006, while jewelry demand grew by 6 percent to 558.2 tonnes compared with 526.2 tonnes in 2006, data from World Gold Council shows. According to industry estimates, all of India’s 700 tonnes of annual gold requirements are imported making the local price of the metal vulnerable to the exchange rate. India, the world’s biggest user of gold.
Article by Alan Smithee
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