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

ancona · Apr 8, 2014

If Indian finance ministers truly had their thinking caps on, they would encourage rampant imports of gold. In fact, they could even give tax breaks for it. Doing this would show the world that India is serious about legitimate money and her people are not idiots that blindly worship the Fiat God.

Think about it this way, the Indians have so much gold that if it were all melted down and cast in to bars, they would likely have the most stable currency on the planet, even if it were only 25% convertible. Can you imagine the Rupee as the world reserve currency? Wouldn't that put us in our place?

CoinExplorer · Apr 8, 2014

Ancona, one problem is that they have to buy the gold (and oil) in dollars. That's money leaving the economy, while the gold is hoarded. When a gazillion rupee are chasing a finite amount of dollars (in competition with other currencies chasing those dollars), the rupee is devalued. There isn't much call for people with dollars wanting to buy items denominated in rupees (though, I should admit, India actually runs a trade surplus with the US. Maybe they should buy US gold!)

Another problem from the government's point of view, is that the gold doesn't contribute or circulate in the economy after it is imported and sold once. That problem is being tackled by new rules that allow farmers to pledge their gold stash as collateral for low interest agricultural loans, instead of pledging their farms. (I worry about the "get your gold coins/bars/jewelry back after you repay the loan" part, though. Maybe the Hindu farmers will have better luck than the German government!)

ancona · Apr 8, 2014

"Ancona, one problem is that they have to buy the gold (and oil) in dollars."

True enough that, however even though my [sarcastic] comment was largely rhetorical, I do believe that if enough folks started to simply ignore the current paradigm of fiat currencies world-wide, and began to trade in solver or gold, even on a very small scale, and if enough momentum could be built that gold and silver could eventually regain their monetary status. I don't believe it is realistic to presume that this would occur organically, bu tit is possible. At some point this fiasco of an economy will come crashing down around us, and when it does we will take the entire globe with us. The only people that won't be affected are the lost tribes of the Amazon, and perhaps the Amish. Everyone else will be screwed.

pmbug · May 15, 2014

Raising the gold price is unlikely to be the first priority of the new Indian government to be announced on May 16th. But traders in Dubai are increasingly excited by this almost certain consequence. A panel at last month’s Dubai Precious Metals Conference (click here) on the Indian perspective pointed to the probable removal of the tax on gold that depressed prices last year by a new pro-business government.
...

http://www.arabianmoney.net/gold-si...rom-the-new-pro-business-government-in-india/

CoinExplorer · May 15, 2014

Yeah, Modi seems to have this in the bag, but I think it will be July before we see anything enacted regarding the gold restrictions. As far as the import tax, he could change that right off the bat. (You'll notice gold imports have dropped, despite it being spring wedding season. People are waiting for Modi to get into office.)

However, he is going to have his hands full with the transition of power in the world's largest democracy. Muslims are VERY suspicious of him, due to his being a Hindu nationalist, and it's going to complicate relations with Pakistan as well. I wouldn't be surprised to see Kashmir flare up again.

The official election results in India will be released tomorrow (tonight, our time).

pmbug · May 23, 2014

Modi won as expected and reforms are coming:
http://www.bbc.co.uk/news/world-asia-india-27515113

...
India’s central bank has eased import rules for gold by allowing private trading companies to bring the metal into the country, The Wall Street Journal reported on Wednesday.
...

http://www.marketwatch.com/story/gold-rises-after-india-eases-import-rules-2014-05-22

pmbug · Sep 17, 2014

Trade statistics for the month of August have just been released in India, showing a huge surge in gold imports compared to August of 2013. The value of gold officially imported into India in August totalled $2.04 billion, which was nearly three times more than the August 2013 figure of $739 million.

Although the Indian trade deficit fell to $10.84 billion in August from $12.2 billion in July on the back of a lower oil price and a drop in the value of oil imports from $14.3 billion to $12.8 billion, the deficit would have been lower were it not for the surge in the value of gold imports.

Official gold imports for the three months to June had fallen to $7 billion from $16.5 billion in the similar three month period last year. But Indian customs seizures have also risen suggesting the unofficial import trade is just circumventing the restrictions.

Import restrictions had curbed official imports but gold smuggling has intensified. Gold smugglers are very resourceful when it comes to importing gold into India, and smuggling is also set to intensify before the Diwali festival in October.

Recent gold premiums in India have been $4-$5 an ounce but are expected to increase to between $10-$12 an ounce as the festival and wedding seasons peak.
...

More: http://www.goldcore.com/goldcore_bl...ina_Launches_Global_Gold_Bourse_This_Thursday

pmbug · Feb 19, 2015

... earlier today India's Economic Times reported that the RBI, surely facilitated by the drop in oil prices - a key import for India - has finally lifted its ban on imports of gold coins and medallions by banks and trading houses. ...

What all of the above simply means is that the government, tired of fighting a losing war with gold smugglers, has opened up one more avenue by which gold can enter the country on an official, and taxable basis, and as a result physical gold will now resume flowing into India officially ...

http://www.zerohedge.com/news/2015-...mports-gold-can-again-be-used-loan-collateral

benjamen · Mar 9, 2015

Since we cant convince you to stop buying gold, let us keep it "safe" for you....

http://qz.com/358374/can-modi-unlock-1-trillion-worth-of-gold-stashed-away-in-indias-lockers/

benjamen · Apr 14, 2015

http://finance.yahoo.com/news/unexpected-development-india-could-hammer-144707515.html

"Reports suggested officials will launch a program in May where temples can loan their gold to the central government. In exchange, the lenders will receive interest payments on the gold holdings they deliver.

The government then plans to melt down the received gold and lend it out again to local users."

pmbug · Apr 14, 2015

Once you lend it, it's gone. *poof*

ancona · Apr 14, 2015

Indian temples are rumored to contain as much as fifteen thousand tons of shiny stuff. If they were stupid enough to let the government "borrow" it, they deserve to lose it.

coarsequarterly · Jul 3, 2015

This might be because they buy gold and keep it which hinders liquidity. Gold must be liquidated to provide financial flow.

benjamen · Sep 16, 2015

The Indian government is hard at work on the "problem" of a strong demand for gold imports.

http://www.businessinsider.com/indias-gold-monetization-scheme-2015-9
http://piercepoints.com/india-gold-imports-monetization-bullion-interest/

11C1P · Sep 16, 2015

benjamen said:
The Indian government is hard at work on the "problem" of a strong demand for gold imports.

http://www.businessinsider.com/indias-gold-monetization-scheme-2015-9
http://piercepoints.com/india-gold-imports-monetization-bullion-interest/

"creating a system in which Indians holding private gold will be able to deposit it at banks — and then earn interest on their bullion holdings.

The government plans to then make the deposited gold available to buyers across India. The aim is to reduce gold imports from outside the country,"

Another one of those plans that if a person/company tried this, they'd end up being arrested, when a govt does it, they will just take the gold when they feel like it and tell you to suck a lemon and throw you in jail if you make too much of a stink about having your stuff confiscated. I sure hope no one over there falls for this, but there's always a few. Like the beastie boys said, hide your gold cause the girl is crafty like ice is cold.

ancona · Sep 17, 2015

The indian government wants the gold from the temples so bad they can't stand it. There is an enormous quantity that has been given to them over two thousand years and the government wants to have it all. Some speculate there may be fifteen thousand tons, and one estimate says it may be as much as sixty thousand tons, as much of it is in the form of statues that have been plastered over to disguise it so invading armies wouldn't steal it or be able to identify it as gold. Either way, it is a huge amount, and if the government got hold of it, they could solve a whole raft of problems, at least for a while.

Imaging if the U. S. government had been secretly been stockpiling gold for the last forty or fifty years and suddenly performed an audit with media coverage and civilian observers, and they came up with sixty or seventy thousand tons. And then, they put the Comex and JPM to sleep with the paper market rigging so gold and silver could discover their real price. After that, they decide to back the dollar with perhaps five to seven percent gold.

Who's your daddy now?

pmbug · Feb 25, 2016

Indian gold traders say they are struggling to draw buyers despite offering record discounts over rallying international prices, as consumers wait to see if rates can fall further after the Union Budget this month.

The bullion industry expects the government to cut the record 10 per cent import duty on gold in the annual budget for 2016-17 that will be presented on February 29, potentially boosting supply and driving domestic prices lower.
...

http://www.deccanchronicle.com/business/market/100216/import-duty-cut-hope-hits-gold-sales.html

Gold might get a lift next week if India does lower the tariff.

pmbug · Feb 29, 2016

Ouch!

India has reintroduced a local sales tax on gold jewellery after a gap of four years, on top of record import duty, in a move officials hope will dampen demand for the precious metal in the world's second biggest consumer.
...

More: http://in.reuters.com/article/india-budget-gold-idINKCN0W20PO

rblong2us · Feb 29, 2016

these two posts seem rather contradictory Bug .....

is there too much or too little demand ?

pmbug · Mar 1, 2016

As I read it, gov/bank wants to shrink demand (further), so more taxes/duties. Jewelry industry is crying mercy - demand is down enough.

pmbug · Mar 3, 2016

Indian jewelers on strike:

... a dispute ... erupted this week between the nation’s thousands of jewelers and Prime Minister Narendra Modi. Intent on boosting revenue as he reshapes Asia’s third-largest economy, Modi wants to impose a 1 percent excise duty on jewelry produced and sold within the country, and Finance Minister Arun Jaitley announced the move in the budget on Monday. By Wednesday, members of the All India Gems & Jewellery Trade Federation, which represents jewelers nationwide, had started a three-day stoppage.
...

http://www.bloomberg.com/news/artic...-with-gold-tested-as-tax-fight-spurs-shutdown

pmbug · Jan 21, 2019

The Centre’s ambitious plan to mobilise an estimated 22,000 tonnes of gold lying idle with households appears to have fallen flat with its own statistics showing that the collection has nearly halved to merely 6,500 kg in 2017-2018 from close to 11,500 kg in 2016-2017.

The sovereign gold bond scheme (SGB) was launched by Prime Minister Narendra Modi in 2015. Since then, the authorities have barely collected 23 tonnes of gold.

The government has issued SGBs worth Rs 6,661.42 crore for 22.88 tonnes till March 2018, the latest report released on the Centre’s debt management, said.

Now, the government’s policy think tank Niti Aayog has suggested that the scheme be made more attractive.

SGB is a government security denominated in grams of gold. The idea behind its launch was to migrate investment from physical gold to paper gold. One of the key objectives was to reduce the pressure on Current Account Deficit (CAD) and the rupee, arising partly from heavy imports of gold and consequent foreign exchange outflow.

The product was targeted at retail investors who generally prefer to invest their savings in physical gold.

However, SGB, which comes with a five-year lock-in period, has since not been able to replace physical gold buying. ...

More: https://www.deccanherald.com/business/centres-gold-bond-scheme-fails-713958.html

ancona · Jan 23, 2019

Modi is an idiot. Indians will never part with their physical gold. Not only do they not trust the government, they have even less trust in the paper instruments invented by the same government. Modi Should know better than that. As far as the estimated amount of gold in private hands, I would say the original estimate is light. If you add up all the gold held by temples as well, it could well be double that. Remember, those temples simply accumulate that gold, they do not use it. Some of those temples have been around for a thousand years. And the families? They hand that stuff down for generations, also accumulating it as jewelry.

pmbug · Aug 20, 2019

The Reserve Bank of India’s direction to all lenders to promote and publicise the Gold Monetisation Scheme (GMS) from their branches underscores the intent of the banking regulator to make the Scheme a success, said officials from two private banks. The Reserve Bank of India (RBI) on August 16 directed all scheduled commercial banks (except regional rural banks) to promote the Gold Monetisation Scheme that was introduced on October 22, 2015 to replace the Gold Deposit Scheme, 1999.

“All designated banks shall give adequate publicity to the Scheme through their branches, websites and other channels,” said the RBI.

An official from a private sector bank said this “underscored” the importance RBI was giving to the Scheme . Until the August 16 circular, banks were accepting gold deposits under the Scheme but were not actively promoting it, added the banker.
...

https://economictimes.indiatimes.co...on-to-get-more-teeth/articleshow/70730966.cms

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

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