Gold duty Cut Has Driven Demand In Jewellery Sector, Says Augmont Director Sachin Kothari

Augmont - Gold For All, a leading name in the Indian gold industry, has been at the forefront of refining and digital gold services. With the government’s recent reduction in import duty on gold from 15 per cent to 6 per cent, the industry has witnessed significant shifts.

Sachin Kothari, Director of Augmont, in an interview with Bizz Buzz, explains, “This reduction has led to increased affordability and higher demand, particularly in the jewellery sector.” He adds that, despite potential inventory losses, rising consumer demand offsets these risks. The conversation also sheds light on India’s gold price disparity from international markets, influenced by currency fluctuations and local factors.

Kothari further emphasizes Augmont’s use of blockchain technology and secure vaults to protect digital gold investments. He also delves into the evolving gold preferences in India, highlighting a growing interest in digital gold, ETFs, and sovereign gold bonds as consumers seek convenience and transparency in their investments

How has the government's recent decision to cut import duty on gold impacted the overall industry and any direct impact on your business operations as well?

The government's recent decision to cut import duty on gold from 15 per cent to 6 per cent has had a substantial impact on the overall industry. This reduction has led to a decrease in retail gold prices, making gold more affordable and driving increased demand, particularly in the jewellery sector. For businesses, this has translated into higher sales volumes, especially during festive and wedding seasons. However, the reduced prices may also lead to inventory losses, although these are expected to be offset by lower marketing costs and the natural increase in consumer demand.

From the past couple of months we can see gold prices in India are not rallying to international markets, what can be the factors?

The disparity between gold prices in India and international markets over the past few months can be attributed to several factors. Currency fluctuations, particularly the strength of the Indian rupee against the dollar, play a significant role. Additionally, local taxes, import duties, and changes in demand due to cultural or seasonal factors can cause variations in pricing. The government's import duty cut also influenced local prices, making them less aligned with international trends.

What role does technology play in ensuring the security of digital gold investments? Also, how do you ensure the safety and security of your customer's capital?

At Augmont Gold for All, technology plays a crucial role in ensuring the security of digital gold investments by using advanced systems to guarantee transparency, accuracy, and safety. Augmont integrates blockchain technology to provide a secure and immutable record of ownership, allowing customers to track their investments with real-time transparency. Additionally, Augmont employs encryption protocols to protect customer data and transactions from cyber threats, ensuring that every transaction is safeguarded.

Augmont ensures the safety of customers' capital by partnering with accredited, secured vaults, where the physical gold backing digital investments is stored. These vaults undergo regular audits by independent authorities to maintain trust and transparency. Additionally, the gold is fully insured, protecting customers' capital against any physical or financial risks. Through these measures, Augmont guarantees the security of digital gold investments, combining robust technology with industry standards for optimal customer protection.

How are consumer preferences for gold changing in India? Are there any specific trendsor demands that your company is catering to?

Consumer preferences for gold in India are evolving significantly, influenced by factors like rising digital adoption, affordability, and demand for personalized products. Traditional physical gold purchases, such as jewellery and coins, remain popular, particularly during weddings and festivals. However, more consumers are shifting towards digital gold investments due to convenience, liquidity, and secure storage options. Young investors are increasingly opting for Gold ETFs and sovereign gold bonds due to transparency and better returns compared to physical gold.

Augmont Gold for All is catering to these changing demands by offering easy-to-access digital gold products through mobile apps and online platforms. It provides secure investment options with the flexibility to start with smaller amounts, addressing the needs of millennials and younger investors who prefer digital transactions.

Amid market volatility and various geopolitical events, how do you see the Gold investment as a safe option?

Gold has long been considered a safe investment, especially during times of market volatility and geopolitical uncertainty. Amid rising inflation, unstable stock markets, and global economic disruptions, gold acts as a hedge against inflation and currency fluctuations. Its intrinsic value tends to rise when other assets lose value, providing stability to portfolios.

Geopolitical events such as conflicts, trade wars, and economic sanctions often lead to a flight to safety, where investors turn to gold to preserve their wealth. Unlike stocks or bonds, gold doesn’t carry counterparty risk, making it an appealing haven. Furthermore, central banks hold significant reserves of gold, reinforcing its status as a reliable store of value.

Given the current environment of high inflation, volatile markets, and geopolitical tensions, gold remains an attractive option for diversifying portfolios and safeguarding wealth against unexpected downturns. As part of a balanced portfolio, it helps mitigate risk.

What strategies would you recommend to Indian investors looking to diversify their investments in gold, considering both traditional options like physical gold, digital gold or gold ETFs?

For Indian investors looking to diversify their investments in gold, a balanced approach is recommended. Traditional options like physical gold offer the security of tangible assets, while digital gold and gold ETFs provide convenience, liquidity, and the ability to invest in small amounts. Investors should consider a mix of these options, depending on their risk appetite, investment goals, and the flexibility they desire. For instance, physical gold is ideal for long-term holding, while digital gold and ETFs offer ease of trading and quick access to market movements.

What are the advantages of investing in Gold ETFs compared to traditional gold purchases for long-term wealth creation?

Investing in Gold ETFs offers several advantages over traditional gold purchases, especially for long-term wealth creation. Gold ETFs provide greater liquidity, allowing investors to buy and sell units on stock exchanges without worrying about the physical handling of gold. They also come with lower costs, eliminating the need for storage or security charges associated with holding physical gold. Unlike traditional gold purchases, where purity can be a concern, Gold ETFs assure 99.5 per cent purity backed by physical gold. Gold ETFs allow small investments, making them accessible for retail investors to gradually build a gold portfolio over time without needing to invest in large quantities upfront. These benefits make Gold ETFs a more cost-effective and secure option for long-term wealth creation.

What makes Sovereign Gold Bonds (SGBs) an attractive investment, and how do they compare to conventional investment options?

Sovereign Gold Bonds (SGBs) are an attractive investment due to their dual benefits of capital appreciation and interest income. Unlike physical gold or gold ETFs, SGBs offer a 2.5 per cent annual interest, paid semi-annually, in addition to any price appreciation from the rise in gold prices. They also provide tax benefits, with capital gains being tax-exempt if held until maturity. SGBs eliminate costs associated with storing physical gold and concerns about purity, making them more efficient. Compared to conventional options like physical gold or Gold ETFs, SGBs offer higher returns through interest and tax efficiency, while also being backed by a sovereign guarantee, making them secure and low-risk for long-term investors.

What innovations and strategies led Augmont to secure prestigious awards at India Gold Conference 2023-24, reflecting its leadership in refining and digital gold services?

Augmont Gold For All won two awards at the recent India Gold Conference 2023-24 awards due to its innovations in digital gold services and refining expertise. Augmont took home the awards for “Leading Gold Bullion Refiner (All-India) for 2023-24” and “Innovative Digital Gold Player for 2023-24” at the industry event.

Augmont's technological advancements in digital gold platforms allowed seamless transactions, enabling users to buy, sell, and store gold with ease. Their mobile and web-based platforms integrated secure storage, physical conversion options, and 24/7 trading, providing convenience and trust.

In refining, Augmont's state-of-the-art facilities ensured the highest standards of gold purity, reinforcing its leadership in the gold industry. Their focus on sustainability and ethical gold sourcing further enhanced their reputation, aligning with global trends in responsible gold mining and trading. These strategies, along with customer-centric innovations like small-ticket digital investments, positioned Augmont as a leader, earning accolades at the prestigious conference.