‘Got gold?’ SafeGold launches world’s first leasing platform for idle gold
- Lease your gold sitting idle to yield income through SafeGold’s new product – Gains
- SafeGold aims to tap the potential of idle gold assets in India (currently estimated to be about 25,000 tonnes)
- The new product will benefit MSME jewellers to obtain domestic gold and individuals to lease their gold to jewellers to earn a yield (in gold)
- Users can opt to lease their gold assets starting as low as 0.5 gm
Mumbai, 13 October 2022: India’s leading digital gold platform, SafeGold, has announced the launch of its latest ground-breaking offering. Gains is the world’s first and only platform offering consumers an opportunity to earn a yield on individually owned gold assets by leasing them. With Gains, SafeGold aims to tap the potential of idle gold assets in India (currently estimated to be about 25,000 tonnes) and enable 100 million+ retail consumers in the country to diversify their long-term investments. The new innovative offering will also empower India’s underserved MSME jewellery industry which employs nearly 6 million skilled artisans and workers.
India has approximately 300,000 retail jewellers, 20-30% of whom belong to the organised sector. However, most fall into the single-store segment, fulfilling customer requirements at a neighbourhood or city level at most. The vast majority of jewellery in India is produced and sold by these MSMEs, who unlike the larger players are unable to obtain GML from banks. Gains will empower these 50,000 MSME jewellers with access to structured gold metal leases, currently only available to the larger players in the industry.
Customer response at the pilot stage has been overwhelmingly positive, with an average ticket size of 5.05 gms committed by each customer to the lease. Leases have typically sold out within 24 -36 hours of being listed on the platform.
How does Gains work?
- Structured platform: MSME jewellers can list their leases on the SafeGold platform once the jeweller has been thoroughly vetted for creditworthiness and KYC verified.
- Customer safety paramount: Jewellers listing their lease choose the yield rate and tenure they wish to offer and provide a bank guarantee or equivalent collateral covering at least 105% of the value of the gold to be leased. In the event a jeweller defaults, SafeGold would enforce the bank guarantee on behalf of customers who have leased the gold
- Accessible investment for customers and jewellers: SafeGold customers view the listed leases and commit at least 0.5 gm of their gold balance to the lease of their choice. SafeGold facilitates the lease by physically transferring the gold from the customer’s account to the jeweller’s account through a traceable chain of custody, using India Good Delivery bullion. At the end of the lease tenure, the jeweller settles the gold back into the vault, and SafeGold updates the customer balance. Customers have the option to re-lease, sell or take physical possession of their gold balance
- Flexi-Tenure for Jewellers: Jewellers have the option of a flexi-tenure lease where they settle the gold back before the maturity of the lease. Customers will receive a pro-rated yield for the period that their gold has been leased.
- Long-term yields: Customer yield is calculated on a daily basis and accrues to their digital gold account each month. Yields are expected to be from 2.5% (depending on jeweller choice and loyalty incentives offered by SafeGold).
Gaurav Mathur, Founder & MD, SafeGold, stated, “At SafeGold, we are driven by the vision of accelerating India’s digital gold ecosystem. With Gains, we want to empower consumers and jewellers alike to tap into India’s household gold reserves and reinvigorate gold as an asset class. This will reduce India’s dependence on gold imports by mobilising locally owned gold and while driving a simple gold metal lease to MSMEs who are underserved by banks.”
Consumers will be able to lease their idle gold to jewellers on the Gains digital platform or opt for an offline collection in select locations. SafeGold plans to extend the physical collection feature across the nation and help mobilise part of the 25,000 tons of gold owned by Indian households. The brand estimates that approximately 8,000 tons of gold is idle (bars/ coins or unused jewellery). Successfully monetising these assets would help reduce imports by up to $526 Bn at current gold prices in the long run. Historically, earning any returns from physical gold has meant relying on gold price appreciation over long durations of time. With Gains, a customer earns a yield in addition to price appreciation.
- Long-term returns: Investors who plan long-term investments with Gains stand to earn 13-16% annually (based on an annualised price growth of 11% on gold in the past 5 years, and expected yields (in gold) between 2-5%)
- Accessible investment: Users can opt to lease their gold asset starting as low as 0.5 gm on SafeGold’s convenient and safe platform where accessing and purchasing gold is easy
- Greater Liquidity: Gains leases typically mature in 3-6 months. This keeps Gains leases liquid and also gives investors greater control over when they can withdraw, reinvest or even take delivery of their digital gold
- Low barrier to entry: Convenient access to all customers with a fully digital KYC process.
While the product is only available to digital gold customers at this point, SafeGold will shortly offer the facility of collecting gold from a customer’s doorstep.e, Kalyan, and more.