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Idea of Reducing Gold Imports Important

Regardless of the economic situation, utilising savings of the country for investments and thereby creating growth and jobs is a commendable

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Idea, Gold, Imports
The idea of reducing gold imports is important, but suggestions ranging from raising import duties further to imposing bans need to be reassessed urgently. Pixabay

Recent financial news headlines have seen some concern with India’s gold imports and the fact that a significant component of domestic savings is “exported” abroad, which could probably be utilised to spur investments and growth in India. The idea of reducing gold imports is important, but suggestions ranging from raising import duties further to imposing bans need to be reassessed urgently. Regardless of the economic situation, utilising savings of the country for investments and thereby creating growth and jobs is a commendable and much-required objective. However, policies employed to do so must be ones that positively incentivise savers to park their savings in investment options linked to the capital markets than in gold.

To facilitate the growth of the financial sector, the financialisation of savings further, if done well, can help the situation in many ways. Besides channelling investments into businesses through the capital markets, the assets can yield much needed social security through income-generating retirement funds as a generation of workers retires over the next few decades. But, to do so, one must look at structural factors that can induce savers to park their money in the capital markets over and above gold.

Over the last several years increased taxation through a steady rise in the dividend distribution tax, long-term capital gains tax, short-term capital gains tax and securities transaction tax has to some extent slowed down the long-term aim of capital markets being a point of interaction between the savings of investors and capital required by companies. It is essential that going forward policymakers look to address these issues to ensure that markets can operate with as low friction as possible.

The importance of a steady flow of savings into the capital markets is essential not just from an equity perspective, but more so from a debt perspective. The focus must be much beyond only the listed markets. Financial instruments traded in the private markets must be made attractive from a tax perspective to increase capital availability for Indian businesses. Essentially, the vital question the capital markets authorities must ask is are we making investing into companies through both debt and equity attractive enough for investors?

Idea, Gold, Imports
Recent financial news headlines have seen some concern with India’s gold imports and the fact that a significant component of domestic savings is “exported” abroad, which could probably be utilised to spur investments. Pixabay

Additionally, perceptions are critical to capital flow. Investment options will be viewed by market participants not just in terms of current regulations, but also in terms of the participants’ perception of future regulations. While incentives are the way forward, imposing controls on price and volumes will not lead to the desired outcome. Instead, with increased controls, a higher distortion in the market may be observed.

While there have been calls from a few quarters for imposing controls of some type on the gold market, what is needed now is to frame policies that channel savings into domestic assets through incentives. It is also essential to be aware of global trends that affect commodity markets. In an age of unprecedented quantitative easing, robust demand for gold is to be expected. While predicting the future path of global interest rates is difficult, an appreciation of global trends and policies that cater to the same will be essential.

The policy debate between utilising effective regulations versus controls to channel capital is one that has ramifications much beyond the discussion on gold. Given the need India has in terms of both domestic and foreign capital to finance new businesses, distressed assets, and the general credit markets, a reassessment of the incentive mechanism is essential now. Deregulation and stable policy on the supply side, especially taxation policy, are going to be the biggest drivers of both domestic and foreign capital into India.

Capital availability for a country is incumbent upon the three main pillars: (i) of adequate financial instruments and vehicles that investors can utilise, (ii) taxation policies that determine returns from the aforesaid instruments and vehicles and (iii) most importantly, a stable policy regime. The government and stakeholders must continually evaluate as to how to improve upon the three pillars of capital availability, mentioned above.

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As India looks to source capital, a relook at the policy frameworks is critical to incentivising savings into channels that can help create capital for investment and growth. The focus must be on incentivisation, as opposed to further controls that may distort the market. (IANS)

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Researchers Create Incredibly Lightweight 18-Carat Gold Using Plastic Matrix

The researchers can even adjust the hardness of the material by changing the composition of the gold

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Gold
According to the study, gold has the material properties of a plastic. If a piece of it falls onto a hard surface, it sounds like plastic. It, however, glimmers like metallic gold, and can be polished and worked into the desired form. Pixabay

A good news for jewellry lovers. The objects of their desire may someday become much lighter, but without losing any of their glitter – especially with gold watches, as researchers have created an incredibly lightweight 18-carat gold, using a matrix of plastic in place of metallic alloy elements.

According to the study, the research team from the Swiss university ETH Zurich have developed a new form of gold that weighs about five to ten times less than traditional 18-carat gold.

The conventional mixture is usually three-quarters gold and one-quarter copper, with a density of about 15 g/cm3, the study said. Study researchers Leonie van’t Hag, Raffaele Mezzenga and team used protein fibres and a polymer latex to form a matrix in which they embedded thin discs of gold nanocrystals.

In addition, the lightweight gold contains countless tiny air pockets invisible to the eye, said the study, published in the Advanced Functional Material. According to the researchers, gold platelets and plastic melt into a material that can be easily processed mechanically.

For the finding, the research team first added the ingredients to water and created a dispersion. After adding salt to turn the dispersion into a gel, they next replaced the water in it with alcohol.

Thereafter, they placed the alcohol gel into a pressure chamber, where high pressures and a supercritical CO2 atmosphere enables miscibility of the alcohol and the CO2 gas; when the pressure is released, everything turns it into a homogeneous gossamer-like aerogel.

Heat can be further applied afterwards to anneal the plastic polymers, thus transforming the material and compacting into the final desired shape, yet preserving the 18-carat composition, the researchers said.

According to the study, this gold has the material properties of a plastic. If a piece of it falls onto a hard surface, it sounds like plastic. It, however, glimmers like metallic gold, and can be polished and worked into the desired form.

Gold
A good news for jewellery lovers. The objects of their desire may someday become much lighter, but without losing any of their glitter – especially with gold watches, as researchers have created an incredibly lightweight 18-carat gold, using a matrix of plastic in place of metallic alloy elements. Pixabay

The researchers can even adjust the hardness of the material by changing the composition of the gold. They can also replace the latex in the matrix with other plastics, such as polypropylene. Since polypropylene liquifies at some specific temperature, ‘plastic gold’ made with it can mimic the gold melting process, yet at much lower temperatures.

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The researchers noted that, while plastic gold will be in particular demand in the manufacture of watches and jewellery, it is also suitable for chemical catalysis, electronics applications or radiation shielding. (IANS)