FM Mr. Jaitley says Gold duty to stay.

It seems our finance minister Arun Jaitlet has finally said the inevitable that the duty on Gold that govt. imposes during import is likely to stay. It’s reported here. Current duty is 10% each on gold and silver. After he failed to reduce it during budget or even mention it, I kind of guessed that he may not remove it anytime in near future. Then came the news that RBI is planning to sell some of India’s gold from Nagpur vault claiming that it is “impure” and that London has better gold. RBI says it will buy the “purer” gold there and store it not in India but with Bank of England in London. I don’t know why. I can only imagine what Mahatma Gandhi will say about trusting the British bank with our gold.



Anyway, if you are waiting for the gold duty to fall so you could buy, it isn’t falling in near future, so go ahead and buy now before Rupee falls more or Gold rises more in dollar terms.



India is a trade deficit country that buys from world more than it sells. Since India doesn’t produce gold, it is imported from outside just like Petroleum. This is unsustainable without Rupee falling steadily over time compared to currencies of trade surplus countries as well as dollar. If PM Modi’s plans of making India a manufacturing hub materializes, then that may help to a large extent. But these are long term plans and we don’t know when and how this will happen and may take years. In the mean time rupee will continue to bleed through your pocket, savings accounts etc.



For now though if you want to save your hard earned capital/savings that you want to store and not deploy in risky ventures like stocks/bonds or bank deposits, then gold will do the trick. Remember, gold is not an investment, it is money. It doesn’t give you an interest income but it will retain your purchasing power over long periods of time.