core sector communique

Will India, world's largest gold consumer come up with a draconian new measure to deter people from buying gold and silver. The question has been on the air for sometimes after two European nations (Austria and France) took steps to restrict purchase of gold and other precious metals.Many believes that India may come up with such a measure to check on climbing inflation,to keep the value of its currency and also to keep black marketeers and fraudsters away from the gold market. But why India should take such measures? It is unlikely, said analysts. However some suggests that it’s high time in India too to restrict purchase of gold and other precious metals by rich people by cash (often using black money) well aided by jewelry shops.Government didn’t have any account of gold purchase by people other than the one given by jewelers. Jewelers on the other hand are only submitting records to match the stocks which are only one third of their actual holdings.By restricting purchase via banks, credit card or any other electronical methods, government gets records of purchase and also entitled to earn huge amounts as tax from retailers. But unlike their European counterparts Indian authorities never wanted to control the market completely and wouldn’t mind their people having true power over their own economic destiny.In India, purchasing gold is one of the best ways to turn black money into white and authorities remained a mere spectator on the side of this. Analysts also said restricting gold purchase could help to curb down the dreaded dowry system prevailing in the country which is often dealt in gold.They pointed out that such a move will not affect the booming gold industry in the nation as all such transactions (trades including Futures) are accountable and only those black marketers and fraudsters will be in trouble.However, some said it may affect India’s gold purchasing power in a big way and the country might lose its No 1 consumer status to China if any restrictions on gold purchase imposed. Vast majority of Indian’s are not keeping a bank account let alone credit cards or other amenities. They were paid in cash and most of them aren’t even accountable. So any restrictions will be dealt with stiff opposition from the gold loving common man of india.So, the blackmarketters and fraudsters in the country can enjoy their ride on the back of common man and can contribute to India’s glittering gold market. Meanwhile, France’s decision to restrict precious metals’ purchase by cash (people buying metals worth $600 more (450 euro) or more required to pay for their purchase via a credit card or bank wire transfer) could create more panic in the already debt crisis hit European economy.Analysts said French decision to restrict gold purchase will definitely add more pressure on Europe’s struggling economy as it may pace up currency devaluation in the region. Authorities are presumably so frightened that a growing number of citizens are abandoning rapidly devaluing paper currencies and preserving their wealth through precious metals and it’s high time to crack down on the anonymous purchase of gold and silver. Austria started the restriction allowing people to buy up to $20,000 worth gold at a time, an amount which would purchase just 11 ounces.In Europe, these measures were taken also to curb the illegal sale of stolen metals like copper, steel, etc given the rampant rise in thefts of these metals from telephone poles. Situation in India is entirely different and any such move will hit its booming economy in a bad way, analysts warned.