Post offices to sell gold coins
16 Oct 2008
The ubiquitous post office will provide a unique service, retailing 24 carats gold coins. The pilot venture will cover 100 India Post outlets in Delhi, Tamil Nadu, Maharashtra and Gujarat where 24 carat gold coins of 0.5 gram, 1 gram, 5 grams and 8 grams would be available. India is the world's biggest consumer of gold consuming 700 tonnes every year.
The service was inaugurated yesterday by communications and IT minister A. Raja, in New Delhi, following an agreement signed between India Post, World Gold Council and Reliance Money.
World Gold Council will help market Swiss Medallions supplied by Reliance Money with India Post offices operating as the point of purchase. The gold coins will be packed in a sealed cover with the certification from the Swiss preciouis metals refiner Valcambi, which operates one of the world's largest and most efficient integrated precious metals plants at Balerna, Switzerland.
Raja said ''Gold coins available through our post offices carry internationally recognised certification and has low risk of duplication.''
Raja further added that the prices of the gold coins would be competitive, based on the prevailing prices of gold. ''The sale of gold coins will gradually be extended to other post offices based on public response. In the next phase, post offices will sell gold coins with the India Post logo,'' he said.
Ajay Mitra, managing director, World Gold Council said ''Unlike banks, which sell gold coins at a margin of around 12 per cent, post offices will sell gold coins at a margin of around 7 per cent. Customers will therefore get price benefit if they buy from post offices.''
This launch has come at a time when the global financial crisis is expected to affect festive gold buying in India, though Reliance Money proposes to sell half gram gold coins for Rs500 and 1 gam for Rs1,000. Gold has been the traditional investment and heritage asset in India, which will now be made easy for every Indian in all parts of the country to buy premium quality gold coins shortly from post offices in the country.
The fact that India is the world's biggest consumer of gold with a demand of around 80 tons of gold coins, will add to the revenues of the India Posts, which has over 150,000 post offices and help its parent ministry, department of posts' to cut its net loss of Rs1,249 crore on revenue of Rs5,322 crore (latest figures available for the year ended 2006-07).
India Post has been remodelling itself and has begun providing various services apart from its traditional role of handling only postal traffic. Today, post offices sell finacial products like mutual funds, Darjeeling tea in West Bengal, university applications, prasad from various temples in Andhra Pradesh and Kerala and aloe vera herbal products in Gujarat.
Director and CEO, Reliance Money Sudip Bandyopadhyay, said, ''We want to take the culture of structured investments in gold to the masses through India Post and provide gold at impeccable quality, quantity and price points''.
World Gold Council's managing director Ajay Mitra said, ''Retailing gold through India Post is a ground-breaking initiative in the Indian investment sector and one of its kind in the world.''
World Gold Council (WGC) managing director Ajay Mitra said on the sidelines at the launch that in the current financial crisis in the global market, semi-urban and rural India are going ahead with gold buying, while in urban centres, they are adopting a wait and watch policy.
