India's $65 billion current account deficit problem can be entirely solved if Indian households sell just 1% of their cumulative holding, according to Anand Rathi Wealth's Joint CEO, Feroze Azeez.
India holds $4 trillion worth of household gold. The current account deficit is $65 billion. Azeez said that is just 1.5% of the total gold stock.
"The math is very clear," he told NDTV Profit. "If we have a $65 billion current account deficit, $65 billion is just 1.5% of our total household gold reserves."
To prove the point, Anand Rathi ran the exercise internally. The firm's 403 relationship managers asked their 13,800 client families to sell an average of 100 grams each. Aziz said the response exceeded expectations.
"Several clients proactively wrote to us," he said. "My CEO's wife — who loved certain jewellery — sold it despite the emotional attachment. Her statement was: I am emotionally attached to this jewellery, but I am more emotionally attached to the country."
Aziz said the firm believes it can directly catalyse Rs. 2,500-3,000 crore in gold sales from its own client base alone.
The Investment Case for Selling
Aziz was direct about gold as an asset class. The 10-year rolling return on gold from 1970 is 4.1%. Add rupee depreciation and the figure reaches approximately 8.5%. This is roughly in line with returns from Sukanya Samriddhi Yojana.
"I am not asking you to sell at the lows — I am asking you to sell at the highs, and to sell something that has not been able to reach double digits on a 10-year basis," he said.
Aziz said one government measure could unlock the drive immediately. "If the government were to announce zero capital gains on gold for three or four months, people would queue up to sell," he said.
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