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What are the constituents of a Bullion Market?

    IndianMoney.com Research Team | Monday, February 09,2009, 03:32 AM
 

Constituents of Bullion market are:

  • Banks
  • Importing Agencies
  • Bullion dealers
  • Jewelery manufacturers
  • Mutual Fund (Gold-ETF)
  • Traders/Brokers
  • Arbitrageurs
  • Retail Investors

Facilities for banks and nominated agencies

  • Since this is not a futures contract, banks can directly become members of NSEL, otherwise they can participate as constituents
  • Banks can sell bullion at multiple locations electronically in risk free environment with payment guarantee given by NSEL
  • They can incorporate suppliers’ quote plus margin forming orders to be submitted on NSEL Located at one place, they can sell bullion at various locations across the country in risk free environment without any capital investment in setting up offices
  • Freedom from credit risk and counter party defaults in these impulsive markets
  • Banks must prepare themselves to compete against intra-day and overnight volatility leading to customer’s defaults by using NSEL secured platform

Facilities for Bullion dealers

  • Get a ready market to sell gold and silver
  • Development of trading and delivery business at various locations across the country using our platform
  • Take membership of NSEL and give client id to your customers.
  • Customers can place orders in NSEL terminal any time till 11.30 pm
  • As an alternative of creating your own B2B portal, use the structured platform created by NSEL

Advantages

  • No capital investment
  • Safe and secure mechanism
  • Increase size of business
  • Increase area of operation without investment

Facilities for Jewelery merchants

  • Authority to quote your own buying price
  • Simplicity of quoting price at any point of time during your business hours
  • Easy buying even 1 Kg or 100 grams of gold at parity price
  • Receiving the most competitive quote on a single platform in your computer without making telephone call
  • In times of parity as well as disparity, our prices will be closer to physical market price
  • A yardstick spot price available for making your business decisions to buy or sell and also to fix your own price in your shop

Facilities for Traders / Brokers

  • Potential for introducing a fully fledged broking business in bullion market
  • Budding clientele and earning handsome brokerage
  • Simplicity of trading seamlessly at least cost
  • Book profit based on intra-day trading

Facilities for Retail investors

  • NSEL provides an investment stage for HNIs and Retail investor
  • Invest your savings in gold, hold gold in demat form, whenever you desire, liquidate your stock and realize full appreciation value
  • For Gold 1 Kg ( Rs. 12 -13 lacs) storage cost Rs 7.50 per day

Facilities for Arbitrageurs

  • Arbitrage between futures and spot
  • Delivery fungible between futures and spot
  • Operational comfort: Spot and futures available in one platform through CTCL
  • Canvass of commodity trading becoming absolute with both cash and futures on electronic platform just like stock market

In present day context, the following statements hold true:

  • Gold is being valued in India as a less important source of investment after bank deposits.
  • India is the major investor in gold jewelery.
  • Domestic consumption is responsive to monsoon, harvest and marriage seasons.
  • Indian jewelery off take is sensitive to price increases and more so to instability

Thus the Bullion Market in India even after experiencing several corrections has retained its status of being a recognizable index highlighting the economic growth of the nation in recent times.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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