When the Fiat currencies fail, Gold get its real power.
The fall of US Dollar, Euro is inevitable. This was the reason BRICS was formed.
Also, the hegemony of IMF, World bank has been challenged by the BRICS Bank.
China and Russia are purchasing the Gold like there is no tomorrow, just to back their currency.
Indian domestic holding of Gold is more than the sum of Gold reserves of many developed nations. Bringing this Gold into the economy will be great for India.
Israel has gold coins as a legal tender. Israeli Government is the first Govt, in the world to re-introduce Gold in the economy as the legal tender. Israel has Shekkel and Gold coins issued by central bank as the legal tender.
Now lets analyse :
1. Sovereign Gold Bond : If these bonds are guaranteed by the Government of India, which means if the Government issues only that much bonds which is backed by the real quantity of Gold, then this scheme will give desired results. But if these scheme is just like the schemes of JP Morgan, Goldman Sachs in USA, where they issued Bonds to the infinity and they had no real Gold, then this becomes a Ponzi scheme.Please do not give the word Sovereign much value.Do read the details.
2.Gold Monetizing Scheme and Gold Coins- Recycling the gold of the country: If these results in bringing Gold in the economy, that will be a masterstroke by the Modi Govt. Also, if Gold Coins are also used as legal tender, which will be in addition to our paper currency, then India can take over other developed nations in the long run, as US Dollar and Euro have outlived their due life.BRICS economists have predicted that 2008-09 recession was just a trailer of the coming Final Financial Collapse of West.
CAclubindia
