Before dealing with the matter of Indian Bullion Market, firstly we need to know the meaning of the word “Bullion” in economic terms. We can define bullion as a precious metal primarily ’gold ' that can be cast into ' ingots ' or minted into ' coins '. The important characteristic of bullion is that it is valued by its mass and purity rather than by its face price as in the case of money. In short, the amount of bullion owned by a nation is exactly the inherent valuation of the amount of gold treasury that a country has. It is used as an indicator of the wealth possessed by a nation. It is needless to say that the market is under the strict management of the Central Government.
Until 1990, the Gold Control Act banned its citizens from possessing gold bars. The investment in smuggled bars was also limited and was done before willingly converting them into jewelers by the families that were financially sound when supplies arise at times of wedding or other social occasions.
Though the scenario changed in the period post 90s when investment in small bars both imported and locally made that had proliferated from local refineries had increased considerably. During the mid 90s, Gold began to be used as a method of masking riches when the local rupee value had experienced a stable rise. Such an increase in investment in gold was uninterrupted in 1998 when over 40 tones of gold from bonds that were initially issued by the Reserve Bank of India (RBI) were restored back to the public.
Even though in cities gold is having to compete with investment in stock market, industries, and a wide variety of durable consumer goods, the rural people till date prefer to invest in 22 carat jewelers. In order to tap this hoarding of gold privately the Government announced a new scheme in its budget for the year 99-2000. It allowed the commercial banks to take deposits in terms of gold bars, coins or jewelers against the payment of interest.
Therefore the Bullion Market in India even after undergoing several corrections has retained its status of being a familiar index highlighting the financial growth of the nation in recent times.
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