Recent customs duty cut on gold to set stage for active precious metals market; says Kothari-Director of Augmont Gold for All

Gold impacts investors by providing a hedge against inflation and market downturns, offering portfolio diversification and potential capital appreciation. However, its price volatility requires careful risk management, says Sachin Kothari in an exclusive e-mail interview with Zee Business.

Sachin Kothari is the Director of Augmont Gold for All, India’s largest fully integrated gold player, encompassing refining to retailing. As a Chartered Accountant (CA) and a second-generation entrepreneur, Mr. Kothari brings over two decades of invaluable experience in finance and strategic management to his role at Augmont.

1. How do you foresee the recent customs duty cut impacting gold investors in the long term?

 2. In the current market, do you believe that gold prices are increasingly being influenced by demand dynamics rather than the fluctuations in the US dollar? How does this shift impact investors?

b)     Geopolitical Uncertainty: Political instability, wars, and global crises drive demand for gold as a safe-haven asset.

e)     Government Policies: Regulations, taxes, and import duties in major gold markets can influence both supply and demand.

Revenue loss to the government may be approximately Rs 26000 crore due to customs duty cut but the same is likely to be compensated by import of gold through the official channel. SGB is one of the most expensive tools for government borrowing now as gold prices have elevated. And it seems, uncertain whether the government will issue new securities during the current fiscal year.

 The last tranche of the SGB scheme was scheduled for redemption on August 5, 2024, the government saved around Rs 182 crore of liability in SGB redemption by reducing 9 per cent customs duties on gold in the budget. The government almost paid Rs 1,908 crore  to the investors holding 2.75 tonnes of August series SGB as per the redemption price of around Rs 6938/gm.  If there had been no customs duty cut, redemption gold prices would have been close to around Rs 7600/gm, which would have led to an outflow of nearly Rs 2090 crore.

 4. How is digital technology being utilized to improve the customer experience for gold buyers, and what innovations are you seeing in this space?

Technology advancement has been boon for improving customer experience for buying gold:

b)     Online Marketplaces: Fintech Platforms offer options to buy and sell digital gold, making it convenient for mass customers to invest in gold without physical delivery.

c)     Mobile Apps: Specialized apps from jewelers and financial institutions allow customers to buy, sell, and manage their gold investments on their smartphones.

e)     Blockchain Technology: Blockchain is being used to ensure the authenticity and traceability of gold. Each piece of gold can be tracked from the mine to the consumer, ensuring it is conflict-free and authentic

5. How have consumer preferences for gold as an investment evolved in recent years? Are there noticeable trends among different demographics, such as millennials and Gen Z?