Urge SEBI to help unlock value of gold, 125% of GDP will be monetised: Kotak AMC's Nilesh Shah

Urge SEBI to help unlock value of gold, 125% of GDP will be monetised: Kotak AMC's Nilesh Shah

Nilesh Shah of Kotak AMC urged the Securities and Exchange Board of India (SEBI) to work with market participants to find ways to unlock the value of gold lying idle in vaults across the country, roughly 125 percent of the GDP.

Speaking at SEBI’s annual Samvad symposium, Shah said that while gold currently offers only a wealth effect, it has the potential to contribute far more meaningfully to the broader economy.

Gold prices have been shining bright amid relentless geopolitical turmoil. Over the past year, the price of the yellow metal had shot up over 80 percent, beating the returns for most securities.

According to IIFL Capital, the cumulative value of all the gold owned by Indian households is roughly over $5 trillion, with around 25,000 tonnes of gold. In contrast, India’s GDP is around $4.1 trillion.

“Indian households have ~25,000 tons of gold, and the proportion used up as collateral is very low," said the report.

International brokerage Morgan Stanley is more optimistic: suggesting that Indian households own 34,600 tonnes of gold.

“The stock of holdings of gold provide a positive wealth effect for the household balance sheet, which is also benefiting from cyclical factors of lower interest payments with monetary policy easing and a positive impact on disposable income through direct and indirect tax cuts,” the brokerage had mentioned.