Gold standard

This refers to the article “Resurrection of gold standard” (Business Line, July 13). Even if the Nobel Laureate Robert Mundell’s prediction that “Gold will be part of the structure of the international monetary system in the 21st Century” is unlikely to come true within the predicted timeframe, India has every reason to unearth and put to productive use, the country’s gold stock — hidden in households, religious institutions, moneylenders’ lockers and with people who conceal their wealth for various reasons.

According to media reports, observing that gold imports are contributing substantially to India's current account deficit, an RBI panel is looking into the aspects of devising some alternative routes, such as bringing out the gold that exists. The panel is also likely to examine whether domestic stock of gold can be brought into the mainstream by devising appropriate financial instruments. This is a step in the right direction.

People’s emotional attachment to gold in metal form will come down only if the government is able to infuse confidence about the effectiveness of ‘paper gold’ as a store of value with easy liquidity.

Awareness should also be created about the loss involved in abuse of gold for show-off purposes such as gold-plating of roofs, statues and flag-masts or in re-making of ornaments.

M.G. Warrier

Mumbai

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