INSURANCE NEWS
MUMBAI: Gold, the most trusted investment for centuries, may well become an acceptable asset class for the insurance regulator after nearly a decade of lobbying, but that could push up the price of the ever-rising precious metal, taking it beyond the reach of many.
The investment committee of the Insurance Regulatory and Development Authority (Irda) will soon decide on whether insurance companies who raise investible surplus of more than 2.5 lakh crore a year should be allowed to invest in gold or not, three people familiar with the proposal said. Other proposals include buying credit default swaps (CDS), an insurance against loan default, and commodity derivatives.
"We are seeing whether insurers should invest in gold in physical form, or in any other form of financial instruments such as exchange traded funds, or other derivatives,'' said an executive at the regulator who did not want to be identified. "We have to see if we reach a consensus."
The decision by the Irda board last week to review investment guidelines for insurers comes in after a commodity exchange and the industry lobby group World Gold Council (WGC) presented its case to the regulator on the benefits of gold investments. There is no certainty that the committee will accept the proposal as gold investments also carry the price risk like any other asset.
"We have been asking them to allow investment in derivatives of gold since 2002,'' said SB Mathur, secretary general, Life Insurance Council."At present, gold and silver have developed as asset classes."
Gold has been one of the best-performing assets this year, returning about 16% in US dollar terms amid turbulence in the financial markets triggered by the European sovereign debt crisis. Investors such as Jim Rogers, a former business partner of billionaire George Soros, are betting that gold could touch at least $2,000 an ounce, a 15-20% upside from current levels. The demand for the yellow metal may surge with demand from India, the world's biggest importer and China where rising incomes induce purchases.
If the insurance companies join the chase for the metal when others are also piling on to beat potential inflation due to unrestrained printing of currency in the West, the prices could rise further.
http://m.economictimes.com/PDAET/articleshow/11248141.cms
沒有留言:
發佈留言