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Indian government may offer bonds payable in gold

Section: Daily Dispatches

Do they really think people will fall for such a promise rather than keep owning gold directly?

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Government May Issue Gold Bonds

By Mahua Venkatesh and Anupama Airy
Hindustan Times, Guragon, India
Wednesday, November 21, 2012

You may soon have options to invest in new financial instruments that are linked to gold, such as a possible gold bond.

With savings rates dropping from 35% about five years ago, the government, trying to boost savings and discourage hoarding of gold in physical form as a speculative activity, is planning to soon come out with attractive paper products including gold bonds, riding on India's craze for gold.

Though the details are yet to emerge, experts say that in such instruments investors may be allowed to invest cash or offer gold against an assured minimum return.

At the time of maturity investors are given the option of receiving gold or cash. The funds raised are likely to be used to build infrastructure projects. The government is expected to offer soverign guarantee to notified companies that can sell such bonds and back it up with hedging in global gold markets to assure minimum returns linked to the metal.

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GoldMoney adds Toronto vaulting option

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Top government sources told Hindustan Times that a gold instrument proposal was discussed at a recent high-level meeting on efforts to boost savings and investment rates in which the chairman of the Prime Minister's Economic Advisory Council (PMEAC), C. Rangarajan, and finance minister P. Chidambaram were present.

"As the recent RBI data showed a declining trend of savings by Indian households including bank deposits, it was suggested in the meeting that in order to attract household savings, paper products that are linked to gold be developed," a finance ministry official said.

Asked what would be the nature of these instruments, the official said, "We are still working out options. Gold bonds could be one of them."

India has never issued gold bonds but banks have gold deposit schemes that have not been very successful.

With gold prices soaring in the last couple of years, officials said there is a good chance that the new schemes would find takers unlike the past gold-linked schemes that were on offer that did not do well because investors preferred stocks that then offered higher returns. Now, with stock markets hit by high interest rates that lowered corporate earnings amid a global economic crisis, gold is treated as a safe haven.

"Uncertainty in the stock market coupled with U.S. fiscal cliff fear would favour gold and schemes and instruments linked to gold are likely to succeed," said senior economist D.H. Pai Panadikar.

However, a official in the Planning Commission said, "Breaking the trend of Indian households that are keen to hold gold in physical form to parking funds in instruments that are linked to gold will take time and may not happen immediately."

India is the largest consumer of gold in the world and largest investor in gold -- mostly bought as coins, jewels, and bars.

India and China account for nearly 50% of world demand for gold either as jewellery or investments. This year India imported gold worth $60 billion amid rising prices, while in 2011 it was worth $40 billion, putting pressure on the country's current account deficit that may in turn depreciate the rupee.

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Prophecy Platinum Intercepts Best Pt+Pd+Au Grades Yet
at Wellgreen Project in Yukon Territory: 5.36 g/t

Company Press Release
Tuesday, September 11, 2012

VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) announces more results of its 2012 drill program on the company's fully-owned Wellgreen platinum group metals, nickel, and copper project in southwestern Yukon Territory, Canada. Four surface holes and four underground holes all intercepted significant mineralized widths, ranging from 28.5 meters (WS12-201) and up to 459.5 metres (WS12-193). Highlights include WU12-540, which returned 8.9 metres of 5.36 grams per tonne platinum, palladium, and gold; 1.73 percent copper; and 1.01 percent nickel within 304.5 meters of 0.66 g/t platinum-palladium-gold, 0.20 percent copper, and 0.27 percent nickel.

The surface drill program started in June and has completed 16 holes (assays pending for 12 holes) with two rigs now on site. The surface program continues to progress at a steady pace.

Prophecy Chairman John Lee commented: “Wellgreen is a very large nickel, copper, and platinum group metals project with near-surface high-grade zones. High-grade intercepts will be incorporated into resource modeling and mine planning in the pre-feasibility study. We expect further positive drill results from Wellgreen shortly.”

Wellgreen features a low 2.59-to-1 strip ratio, is situated at an altitude of 1,300 meters, and is only 15 kilometers from the two-lane paved Alaska Highway. Those factors significantly minimize the project's indirect costs.

For the complete company statement with full tabulation of the drilling results, please visit: