Kerala gold loan companies hold 200 tonnes of gold jewellery

Gold is the most followed and globally traded commodity as gold is the world’s primary monetary asset. 

Respected economic historian and author of the “Gloom, Boom and Doom Report,” Dr. Marc Faber has warned about the continuing and coming decline of western economic power and believes that the generation of young people starting to work today will be the first in two hundred years to have a lower standard of living than their parents had. He believes dividend paying Asian stocks will grow wealth in the coming years and remains an advocate of owning physical gold”. Japan and  Western society’s  modern generation of  younger people– will earn less than their parents so they will have less wealth than their parents.

Emerging economies of East Asia used the proceeds to focus on production rather than consumption to become industrial powerhouses.  Banks now generally charge more to hold one’s money than the interest they pay out. Faber also likes the stock market in India and thinks it could see gains of 15% next year. The new government is free market and enterprise friendly and Faber believes the central bank in India is the “world’s best central bank.”

Ranking	Country	Tonnes of Gold	% of Reserves
1	United States	8133.5	72
2	Germany	3384.2	68
3	International Monetary Fund	2814	NA
4	Italy	2451.8	66
5	France	2435.4	65
6	Russia	1168	10
7	China	1054.1	1
8	Switzerland	1040	8
9	Japan	765.2	3
10	Netherland	612.5	54
11	India	557.7	7
12	Turkey	523.8	16
13	European Central Bank	503.2	27
14	Taiwan	423.6	4
15	Portugal	382.5	79
16	Venezuela	367.6	69
17	Saudi Arabia	322.9	2
18	United Kingdom	310.3	11
19	Lebanon	286.8	22
20	Spain	281.6	24
21	Austria	280	42
22	Belgium	227.4	34

Source World Gold Council

Three gold loan companies in Kerala have more precious metal in their vaults than the gold reserves of some of the richest nations. Muthoot Finance, Manappuram Financeand Muthoot Fincorp jointly hold nearly 200 tonnes of gold jewellery, which is higher than the gold reserves of the following countries.

Ranking	Country	Tonnes of Gold	% of Reserves
23	Philippines	194.79	24
24	Kazakhstan	184.026	25
25	Algeria	173.63	3
26	Thailand	152.44	4
27	Singapore	127.42	3
28	Sweden	125.78	8
29	South Africa	125.21	10
30	Mexico	123.1	2
31	Libya	116.6	4
32	Greece	112.4	69
33	Bank for International Settlements	111	NA
34	South Korea	104.4	1
35	Romania	103.7	9
36	Poland	102.9	4
37	Iraq	89.8	5
38	Australia	79.9	6
39	Kuwait	79	8
40	Indonesia	77.1	3

India accounts for 32% of the global demand for gold, a means tested insurance for millions of families that have little access to other forms of social security. Kerala, is the southern most state of India, where 200,000 people are employed in the gold industry. Gold is as rock solid an investment as triple-A rated Treasuries, adding to a movement that places gold at the top tier of asset classes. Gold is a monetary asset and should be treated on an equal footing with cash and also makes it an ideal collateral for over-the counter short term loans, although its critics argued the market has been too volatile and too small for it to be considered a legitimate currency.
Historically, people from Kerala have excelled in financial services as an ethnic group. The size of these companies reflects their innovative and entrepreneurial skills. Gold loan business also feeds from a strong dowry system.
Muthoot Fincorp has a gold loan portfolio of £ 855m, and then had 41 tonnes of gold in its vaults. “Then, two things happened — gold prices declined and banks became aggressive in gold loans. As gold prices declined, gold collateral business nosedived reflecting on gold holdings,” said Thomas John Muthoot, chairman and managing director of Muthoot Fincorp.

Muthoot Finance is the largest gold loan NBFC with a reach of over 4,265 branches across 21 states and four Union territories. Its gold loan portfolio is £ 218m. Manappuram Finance has 3,200 branches nationwide and 20,000 employees, with a gold loan portfolio of £ 900m.