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

pmbug

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I had the chance this week to reconnect with Vishal Vyas, head of operations at India’s top bullion dealer, Pushpak Bullions Pvt. Ltd.

It was a powerful conversation, as Vishal indicated that the Indian Government and Central Bank is stepping up its fight against gold, with punitive taxation and trade controls. As a result he added, gold is now trading at elevated levels of $1800 oz. within the country. Despite these changes however, Indian families are still buying gold in “small quantities every month”.
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More: http://bullmarketthinking.com/india...ll-factories-and-workshops-are-shutting-down/
 

Unbeatable

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Gold hits all time high in Rupees.



http://www.zerohedge.com/node/478150

So everyone who bought gold at anytime in India is now in the green vs. keeping their money in a bank. (In Rupees)
Also there is a 10% tax now, so the real value of the gold is even higher.
(Plus as PMBug's, post above shows the black market price is much higher than even that!)

Coming soon to a country near you.
 

pmbug

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I think India is now officially the "next Argentina".

Citizens of India have been watching, in stunned amazement, as over the past month the local currency has lost an unprecedented 15% of its value, with a record plunge taking place just last night. And, as so often happens, the population habituated to a government "acting in its best interests" is asking itself - how could we have possibly known this was coming. The answer, as usually happens, was staring everyone right in the face.

As Grant Williams shows in his latest "Things That Make You Go Hmm", the warnings came loud and clear, and were very explicit in the form of not one, not two, not ten, but many more sequentially imposed and escalating forms of capital controls by the Indian central bank that sought to prevent the conversion of paper into hard currency. Gold. (Which also overnight hit a record high in rupee terms).
...
More (incl. timeline): http://www.zerohedge.com/news/2013-...lear-signs-indias-currency-was-set-epic-crash
 

Unobtanium

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Well folks, the [non-black-market] Indian gold market has opened back up:


http://in.reuters.com/article/2013/09/04/india-gold-idINL4N0H025C20130904

Indian gold buyers rush to order now import rules are clear

Wed Sep 4, 2013 6:57pm IST

By Siddesh Mayenkar

MUMBAI, Sept 4 (Reuters) - India's gold buyers lined up to
restart imports on Wednesday as the customs department clarified
new rules, putting the world's biggest bullion buyer back in the
market after a six-week gap and threatening government efforts
to underpin the rupee.

About a quarter of a tonne of gold waiting at Mumbai airport
should head to India's biggest gold market, Zaveri Bazaar, where
sales are nearly $10 million a day, and jewellers said they
would place fresh import orders as early as Thursday.

"Around 250 kg of gold, which is stuck at the airport, will
get released after the order. New shipments could start within
the next 2-3 days," said Bachhraj Bamalwa, director at the All
India Gems and Jewellery Trade Federation.

India's central bank, in a bid to help the government stem
the tide of gold imports which had pushed the current account
deficit to a record high, told importers on July 22 that a fifth
of their purchases would have to be turned around for export.

But the rule's sketchy details caused buyers to hold off and
instead use stocks that had piled up in April and May when
record imports of 304 tonnes provoked the government into hiking
duty to an all-time high of 10 percent.

On Wednesday, the Indian customs department issued its
guidelines on how the central bank's call for gold imports to be
split 80 percent for domestic use and 20 percent for export
would be monitored.

ORDERING TOMORROW
The move aims to boost exports but could also rein in
imports to around 30 tonnes a month - about half average volume
- and keep India on track to meet the government's target of 845
tonnes in the 2012/13 fiscal year.

But domestic buying could surge later this year as a better
than expected monsoon is expected to increase disposable incomes
of farmers in rural areas, who make up about 60 percent of
Indian gold demand.

"My export orders are pending since last month, I'll request
my bank to place an order for 20 kg tomorrow morning," said
Kumar Jain, proprietor of Umed Exports, which ships jewellery to
the United States, Europe and the Middle East.

In a more than 40-clause document, the customs department
laid out details on authorised importers, bonds to be given by
importers over duty payments and "surprise audit or checks" by
custom officers to ensure compliance.

And in a clause that may cause problems it said importers
would not be able to make a third order until they had evidence
of payment to exporters in the form of an inward remittance
certificate, which can take nine months.

"This will make our life difficult at the time of the third
import," said Pankaj Kumar Parekh, vice-chairman of the Gems and
Jewellery Export Promotion Council (GJEPC).

Imports by special economic zones, which export about 20-30
tonnes a year, will not be included in the import restrictions.
Domestic jewellery exports outside these areas are about 60-70
tonnes a year.
 

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I just got a notice today, that the biggest gold smuggling bust at an Indian airport occurred recently. Two women in their mid-20s working as mules for a gold smuggling ring had special jackets with pouches strapped to their bodies under burqas. They were each toting 10 kg in gold bars. They were ratted out by someone, and customs officials were waiting on them. I ran the currency conversion this afternoon, and the 20 kg in gold was worth $939,000, and the minimum profit if they'd pulled it off would have been $97,000.

Since the per capita income for India is something like $8,000, no wonder everyone and their dog is trying to smuggle gold.
 

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A battle appears to be brewing between the Indian government and the Department of Posts, which has floated a tender for the sale of gold coins through some 1,000 post offices.

With the Indian government taking strong measures to discourage gold consumption, the tender by the Department of Posts has also brought on howls of protest by political parties.

Sudhakar Reddy of the Communist Party of India, has questioned the tender in a missive to the Prime Minister. Does the right hand know what the left hand is doing? he has asked.

The Current Account Deficit (CAD) has widened to 4.9% in the quarter ending June for India. "It is a well known fact that such a high CAD has made our country vulnerable with the rupee weakening to abnormal levels. Consequently, the common man has to take the brunt with high inflation and spiralling fuel prices," Reddy said.

Arguing against the tender, Reddy has asked how could one arm of the government go against the government's explicit intention of curtailing gold coin sales.

"The huge surge of gold demands, especially those sold by banks, has played a huge role in the ballooning of the CAD. This has been admitted earlier by the government itself. However, it has been observed that both public sector units and private banks are still randomly and openly selling gold coins across the counter. This is in direct contravention of the government claims on the advisory about gold coins," he added.
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More: http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=218539&sn=Detail
 

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Hmm, the only way I could see this going through is if the coins were made with gold seized from smuggling attempts. That way, no affect on CAD, and it's money in government coffers. They've probably seized at least a few tons of gold this year.
 

rblong2us

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Why dont the Indian Gov / central bank just sell their gold to their people ?

This will give em lots of money to spend on useful gov functions the Indian gold remains in India and everyone is happy .............
 

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Well, before these gold import restrictions went into place, you could walk into any big post office in India and buy "India Post" gold coins in 1oz and fractional sizes. IIRC, they were made by PAMP for the Indian post office.

With no gold mines in India (maybe one or two dinky ones) all the gold has to be imported. The smuggling is so bad now, they're catching hundreds of kg of gold a month, buy 90%-95% is getting though. That money is still leaving India, it just isn't being recorded.

I believe the government auctions the seized gold, but it takes a minimum of 6 months for the courts to release the gold. The government is supposed to auction it off, but I wonder how much actually gets to auction, and who is allowed to bid?
 

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...
"Gold and narcotics operate as two different syndicates but gold smuggling has become more profitable and fashionable," said Kiran Kumar Karlapu, an official at Mumbai's Air Intelligence Unit.

"There has been a several-fold increase in gold smuggling this year after restrictions from the government, which has left narcotics behind."
...
That suggests official data showing a sharp fall in gold buying, which has helped narrow India's current account gap, may significantly underestimate the real level of gold flows.
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http://in.reuters.com/article/2013/12/03/india-gold-smuggling-idINDEE9B20HY20131203
 

bushi

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...well, as history shows us, prohibition in any shape or form never works, but it finances the gangs very effectively. The more severe it is, the better gangs would be supplied financially.

But hey, who cares about destructive unintended consequences, definitely not idiot politicos

Sent from my SM-N9005 using Tapatalk
 

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Love this story...

http://www.zerohedge.com/news/2013-...ht-dubai-india-was-found-carrying-1-kilo-gold

Almost Every Passenger On A Flight From Dubai To India Was Found Carrying 1 Kilo Of Gold
Faced with curbs on gold imports and crash in international prices leaving it cheaper in other countries, gold houses and smugglers are turning to NRIs to bring in the yellow metal legally after paying duty. Any NRI, who has stayed abroad for more than six months, is allowed to bring in 1kg gold.

It was evident last week when almost every passenger on a flight from Dubai to Calicut was found carrying 1kg of gold, totalling up to 80kg (worth about Rs 24 crore).

We soon got information that two smugglers in Dubai and their links in Calicut were behind this operation, offering free tickets to several passengers.
 
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CoinExplorer

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I know, doesn't that rock? I heard that it was jewelry stores advertising in Dubai travel agencies, but in any case, it's funny! I'd love to see every person on that plane deboarding with a s--t eating grin on their face as they line up for customs. :)
 

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http://www.zerohedge.com/news/2014-...-imports-stall-steep-increase-smuggling-india

Pakistan Enforces 30-Day Ban On Gold Imports To Stall "Steep Increase" In Smuggling To India

Pakistan has noticed the surge in smuggling, concerned at a steep increase in import duties on gold in a "neighboring country," and has imposed a 30-day ban on gold imports to curb the 'trade'.
Definitely 'feels like' events are speeding up now again in the gold market, will have to see how it all plays out...
 

CoinExplorer

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I saw that on ZH, but couldn't find the original article on Bloomberg to confirm. There's rumors that Delhi is going to back down on import restrictions and maybe even lower the import tariff, but I haven't found anything concrete yet.

It would make sense, as the elections are in May and we're getting close to the spring wedding season. Also, most Indians are hating the ruling party right now, if the press can be believed. :)
 

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pmbug

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The decision by the Reserve Bank of India (RBI) to grant gold import license to five private sector banks saw gold premiums tumbling by nearly 70% during last week.
...
The world’s largest elections have begun in India. Industry sources believe that the new government which comes to power post general elections will act swiftly to lift the curbs on gold imports. The ruling party in India has already stated that revision of gold import norms will be taken up following the elections. Also, the main opposition party in India has also announced that any action on gold should look at the interests of the public and traders, not just economics and policy.
http://www.resourceinvestor.com/2014/04/07/gold-premiums-tumble-in-india
 
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