India's government seeks to dissuade people from investing in gold

benjamen

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http://www.24hgold.com/english/news...10020&redirect=false&contributor=Chris+Powell

"Worried over the flow of savings for investment in gold, Finance Minister Pranab Mukherjee on Saturday said there is a need to spread financial literacy to encourage people to invest in market instruments."

"Time is ripe to motivate our educated upper middle class to climb from saving mode to wealth-generation mode..."

"In order to check gold imports, the government has increased the basic customs duty on gold bars from 2 per cent to 4 per cent."
 

pmbug

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The minister further said, "Time is ripe to motivate our educated upper middle class to climb from saving mode to wealth-generation mode. ...
:rotflmbo:

:noevil:

:doodoo:

:paperbag:
 

bushi

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...well what can you say, they are waaaay back & trying to catch up with "the greatest & best" economies. The same goes on everywhere - people don't try to be imaginative, especially not politicians. They would follow tried & tested paths. Even when tried & tested, and what has been working in the past (for various reasons), is on the way to destruction - they do not look further than next election cycle.
 

DoChenRollingBearing

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I remember from way back (early 1970s) that there was BIG TIME gold smuggling from Dubai to India. They used to use boats called "dhows", that was the first time I ran into that term.

Gold smuggling will come back if India's .gov cracks down too hard.

Yes, LOL re their asking Indians to save in other ways...
 

bushi

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Due to high prices of gold, Indians are starting to turn to silver:
...yup, and that was my thought, why silver might benefit more from fiat currency depreciation - if the average folk on the street starts waking up to the story.

Gold will be "big boys" toy of choice, where silver, will most probably be a man-on-the-street currency/store of value.

I am getting all excited :)
 

benjamen

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Next attempt: ban the sale of it by banks
http://www.moneycontrol.com/news/cn...in-sales-at-banks-to-clamp-import_722919.html

"The sharp rise in gold imports has the Reserve Bank worried. After clamping down on gold-loan companies, the central bank is now internally debating on banning banks from selling gold coins, reports CNBC-TV18's Gopika Gopakumar.

Akshaya Tritiya may not be auspicious for banks in the future. The Reserve Bank is considering a ban on sale of gold coins by banks to partly curb rising gold imports and because the central bank believes it is not relevant to core banking operations."

:popcorn:
 

pmbug

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Reserve Bank Deputy Governor Subir Gokarn today said there is a need to "dematerialise" gold like any other financial product to reduce its physical imports, the rise of which has been blamed for the high current account deficit that is feared to touch new record high this year.

High gold imports are "creating some macroeconomic stresses and so the challenge is to find ways to replicate the financial characteristics of gold without necessarily causing physical importing," Gokarn told the last day of the two-day annual Bancon conference here.
...
He said while global gold output has stayed stable at around 4,000 tonne per year, the domestic [Indian] consumption of the yellow metal has doubled to 1,000 tonnes annually since 1999, despite a massive rally in the gold price.

"More expensive gold is being imported in larger quantities, which is compounding the trouble," he said.

As gold imports touched a record high last year, pushing up the current account deficit to a historic high of 4.2 per cent in the year, the Reserve Bank has unveiled a slew of curbs on gold purchases and financing.
...
http://economictimes.indiatimes.com...t-rising-gold-demand/articleshow/17360437.cms

They have already introduced paper gold (etfs), higher taxes and banning loans for gold purchases. What will they think up next?
 

pmbug

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India's record current account deficit is "worrying," Finance Minister P. Chidambaram said on Wednesday, and hinted at cutting gold imports to bolster weak external accounts that have brought back memories of a 1991 currency crisis.
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He said he was considering reining in imports of gold, used as an investment tool by Indians but which mean a drain on foreign currency reserves.

"We may be left with no choice but to make it a little more expensive to import gold," Chidambaram said. He however, declined to elaborate.
...
http://gata.org/node/12087
 

pmbug

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... a just released "Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCs" in India, part of a coordinated campaign to minimize Indian gold demand and imports whose direct substitution to "(un)sound money" in the country is one of the reason being attributed for the nation's high current account deficit (as reported earlier) and why the finance minister said "demand for gold must be moderated." The chart shows the staggering eightfold increase in India's gold loans "which monetize the idle gold in the country", in just four short years. In short it proves that in India, gold is the only real money, and is the only fallback option in a country where inflation is still rampant, and where even simple peasants prefer to keep their wealth not in the local paper currency, which has been losing its value aggressively in recent years, but in the shiny metal. Must be "tradition."
More: http://www.zerohedge.com/news/2013-01-02/dont-show-bernanke-chart-gold-loans-india

Tradition!
 

bushi

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... what else you could expect from idiot politicians :D. Instead of ENCOURAGING people to invest into something that will survive the coming paper apocalypse, and be the strength for the country, even if in people's hands - the idiots would rather have their people holding on to dollars/other paper reserves. Ttypical, isn't it.

At this point, I really don't suspect anything sensible coming from any of the politicians in the western, or west-influenced governments. They are all under a collective spell of Neo Keynesians.

Truly, it will be up to some of the mentally-independent states, like China or Russia, to change the game eventually.

DSABug, I think that there might be not so much "bubble in", but maybe rather "panic into" precious metals. Which may end up in very very different dynamic, re. popping it. Basically, the very tip might blow off, but the bulk of the final, monster gain, might hold, mid- long term. Effectively, devaluing all other (especially paper) assets against PMs, big big time.

Sent from my Nexus 7 using Tapatalk HD
 
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pmbug

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From Jan 8:
As if last year's new regulations from the Indian government had not caused enough turmoil at the local gold markets, tomorrow the Ministry of Finance and the Reserve Bank of India (RBI) will be publishing new regulations aimed at raising gold import taxes to 6%. Gold dealers are appalled at these new measures and argue that the country’s gold market – the second largest in the world – is being unfairly scapegoated in response to weakness in the rupee and the large current account deficit. They and many economists argue that such measures are counterproductive, and show that the Indian government is still too wedded to the kind of market controls that became a hallmark of the country’s socialist economy following independence.

Last year the Indian government quadrupled its gold import taxes from 1% to 4%. This week it is expected to release new plans for raising the rate to 6%. In April last year the RBI instructed all Indian commercial banks to deliver biannual reports on the total volume and financial value of all gold imports by financial institutions, banks, gold trading agencies, import and export companies as well as specific gold and jewellery dealers.

However, such measures have had little impact on Indian demand for physical gold. According to the RBI, the country's gold imports account for approximately 80% of its current account deficit. Therefore, the central bank has once again decided to turn the thumbscrew. Last month India's commercial banks were barred from granting credit for gold purchases.
...
http://www.goldmoney.com/gold-resea...rnment-to-hike-gold-import-tariffs-again.html
 

pmbug

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...
Though gold is continuing to lure farmers, given the country's propensity to buy gold on most occasions, an increasing number of farmers appear to be gradually moving away from gold to investing in silver and in real estate.
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As Bachhraj Bamalwa, bullion house owner said, "Pongal is an auspicious occasion for Tamilians and most buy gold to celebrate the occasion, as gold is the symbol of prosperity. Despite a price hike, we have witnessed a growth of around 10% already leading up to the festival. One significant thing that has come to our attention is the sale in silver, which has jumped past gold sales."
...
http://www.mineweb.com/mineweb/content/en//mineweb-silver-news?oid=169649&sn=Detail
 

pmbug

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Indian banks are struggling to attract deposits to fund credit growth amid the slowest economic growth in a decade as customers buy assets such as gold and real estate to protect themselves against inflation.

The credit-to-deposit ratio at lenders led by State Bank of India widened at the end of last month to almost 79 percent, or the highest since the central bank began reporting the data in 1998. Meanwhile, physical savings including gold imports, which slumped to 45 percent of household assets in the 1990s, may end this month at about 66 percent, Vishal Narnolia, a Mumbai-based analyst at SMC Global Securities Ltd. (GLBS), estimated.

The accelerating flow of funds into gold -- spurred by households seeking to curtail erosion in the value of their savings -- may hinder policy makers’ efforts to bolster growth in Asia’s third-largest economy. New deposits aren’t keeping pace with lending, especially at private-sector banks such as ICICI Bank Ltd. (ICICIBC), according to central bank data, signaling that credit growth may halt.
...
http://www.bloomberg.com/news/2013-...d-as-gold-lures-deposits-corporate-india.html
 

pmbug

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In yet another crackdown on gold imports, the Reserve Bank of India has proposed a fresh set of measures to be mandated at the end of this month, to curb imports and tighten criteria for banks lending against the yellow metal.

In its Monetary Policy for 2013-14 announced on May 3, the central bank has announced that it will restrict gold import on a consignment basis by banks. Henceforth, the RBI has said, imports will only be considered if they meet the genuine needs of exporters of gold jewellery.
...
The central bank has also put more curbs on lending against gold. Banks would no longer be able to grant advances for the purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, or units of gold exchange traded funds and units of gold mutual funds.
...
http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=188825&sn=Detail
 

ancona

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Sounds like they are getting more and more nervous. If gold becomes a defacto currency against the rupee, they have lost.
 

Unbeatable

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I also think their central bank answers to the powers that be who run Western central banks.
So all the import controls & letting Goldman Sachs create fractional reserve gold products there could also be about trying to reduce the drain of gold from the West.
 

Aubuy

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Anybody want take a swing at guessing how much spot gold moves next week because of this?
 
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