Thursday, September 25, 2014

India has quit buying gold forever... oh wait

With the caveat that I found this link via our favourite anti-American, Vladimir Putin-funded, Russian neo-Nazi propaganda and disinformation site:

Hindustan Times - 50 tonnes of gold smuggled into India in the past 10 days. Don't click on it if you don't want popups. In fact, I'll quote the whole thing for you so you don't have to worry:

About 50 tonne gold has been smuggled into the country in the past 10 days, and subsequently pushed into the market to cater to a surge in demand for the precious metal in the festive season. There is a heavy demand for gold during Dussehra, for which booking and supply will start from Thursday, when shradh ends and Navratri starts.

Market sources said that 30% of the smuggled gold has been supplied in Mumbai to unscrupulous jewellers, while the rest was distributed to different parts of the country.

Sources said that illegal gold is finding a place in the market because of below average import resulting from the 80:20 scheme and 10% import duty. Against the average monthly demand of 80 tonne, the import is presently around 51 tonne in the country.

Sources said that gold was smuggled into the country through the land route, via Nepal, Bhutan, Bangladesh and Pakistan. “This is because airports have tightened security, restricting the smuggling of gold by the air route,” said a market expert. The Mumbai airport customs, which has started a serious crackdown on gold smugglers, has seized around 529 kg gold from April to August this financial year.

Experts fear that more gold will be smuggled from similar land routes in days to come, as the demand will shoot up once the marriage season begins, in the later part of November. “There will be huge demand because of the festive season, and also the low price at which gold is presently being traded,” said Kumar Jain, vice-president of Mumbai Jewellers’ Association.

Jain said, “The government should immediately bring down the import duty and relax the 80:20 scheme, so that official import goes up. That will bring down the smuggling.”

Rajiv Popley, director Popley Group, said, “Smuggling of gold has been on the rise for the last eight months, due to irrational supply issues. The officially available gold was at a premium, which was higher than anywhere else in the world.”

Popley said that the demand for gold is increasing with the onset of festivities. “Both Dussehra and Diwali are auspicious festivities to invest in gold,” he said.

More food for thought for those of you who like to ponder the possibility of a continuing gold collapse to $400/ozt.

Indian harvest is late this year btw.

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