Rob McEwen still digging for gold and expects $850 per ounce in five years

Section:

Local Banks Strike it Rich with Gold Coins

By Arindam Saha
India Times / The Economic Times
Haryana, India
Thursday, October 13, 2005

http://economictimes.indiatimes.com/articleshow/1260881.cms

MUMBAI -- As the price of gold scales an almost two-decade high,
local banks are moving in to take advantage. Their target this time
is the gold coin retail segment. Corporation Bank, HDFC Bank, and
IndusInd Bank are now jostling for a slice of the pie in this
segment of the market.

A small gold coin weighing just 2 gm is being retailed for close to
Rs 1,500 by some of the market players keeping in mind the upcoming
Diwali and Eid festivals. The banking regulator has now ensured that
customers have the choice of buying these coins from either banks or
traditional retail gold outlets like Zaveri Bazar in Mumbai.

The latest entrants to the business of hawking gold coins are
following in the footsteps of two seasoned players in the market
ICICI Bank and MMTC. And there are many others who are waiting in
the wings with similar products lined up.

However, with less than a month to go for this year's festival,
latecomers may well miss out on cashing in on a good business
opportunity. It is not just the small gift purchases from retail
customers that banks are eyeing. Many corporates like HPCL, BPCL and
Nabard figure among their list of bulk customers.

Banks, unlike retail gold outlets, offer customers the comfort of
proper assaying certificates and hallmarking. Though big retail
shops often provide those details on request, several others are yet
to follow the global practice. For Corporation Bank, the entry into
the gold coins segment is like pouring old wine into a new bottle.
It was the first public sector bank to import gold in India after
RBI sanction in `97.

"Currently 10,000 gold coins have been imported and all coins have
goddess Laxmi's picture," said K Balasubramanyam, senior manager of
the bank. Each coin weighs 8 gms and comes with a purity
certificate. Almost five years ago, Corporation Bank tried its luck
with coins, but the scheme ended abruptly.

IndusInd Bank has also launched similar coins. Coins come in 5-10 gm
range with fineness of 99.9%. Any customer can pick up the coins by
paying cash up to Rs 50,000 at one time. More than 50 branches of
the bank have been designated as sellers of such coins.

Like other, HDFC Bank also sells 24 karat and 99.99% purity gold.
All such coins are imported from the PAMP Refinery in Switzerland.
However, unlike the other sellers, HDFC does not sell gold in coin
shapes. Its 5 gm gold product is available in bars.

With rising gold prices, business has been brisk for banks. Many
banks had purchased gold when the prices were low compared to the
current price of $475 a troy ounce. However, for the customer, what
counts is the day's prevailing price. The sale of gold coins by
banks is open to non-bank customers too.

Like banks, PSU MMTC is also in the fray. It offers gold coins
ranging from a tiny 2 gm to 20 gm. SD Shindhe, manager of MMTC, said
that customers include individuals, retail and corporate entities.
It also sells silver coins of 25 gms or more. According to reports,
MMTC is targeting to earn close to Rs 2 crore in the festival season.

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