Monday, 11th July 2005 (3483 views)

A scheme is being set up in India that would allow people to convert gold ornaments into tradeable units and receive a return on their unwanted knickknacks.

The good news for individuals is that they would be able to get capital appreciation from their gold assets even if the prices of gold falls over a period of time.

UTI Mutual Fund wants to initiate the scheme and is now in talks with bankers that would be willing to act as the 'custodian bank' for exchanging gold ornaments into units of GETF.

These GETF units, which can be bought by pledging gold ornaments or paying cash, will mean anyone would have the opportunity to convert household gold items into tradeable units.

"We are waiting for the Securities & Exchange Board of India regulations to launch the Gold Exchange Traded Fund," UTI asset management company executive director Mr Murthy told PTI.

However, once an investor has pledged a gold ornament in return for GETF units, they will not be able to get the original ornament back.

Instead, they would be offered gold bars or biscuits of equivalent value in their place.

Essentially, the introduction of GETF units will change the role of gold from being a mere asset into a highly liquid and tradeable commodity.

 

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