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India Should Monetise 20,000 Metric Tonnes Of Gold
Today’s AM fix was USD 1,399.50, EUR 1,066.69 and GBP 906.12 per ounce.
Yesterday’s AM fix was USD 1,396.50, EUR 1,068.89 and GBP 909.42 per ounce.
Gold gained $3.90 or 0.28% yesterday to $1,402.10/oz and silver finished down 0.09%.
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Gold initially traded down over uncertainty on whether the U.S. Fed will decrease its QE and adjusted to the news of India's hike on import duties for the yellow metal.

Cross Currency Table – (Bloomberg)
India should monetise their huge gold stockpiles of over 20,000 metric tonnes according to the World Gold Council (WGC) as reported by Bloomberg this morning.
“In the long term gold could be monetized as a financial asset," Aram Shishmanian, the CEO of the WGC said in India overnight.
The World Gold Council has approached the Reserve Bank of India (RBI) to work with it so that bullion could be used as a financial asset, rather than just a physical asset.
Exactly how the considerable store of wealth that is the gold of Indian people could be monetised was not said.
The move comes close on the heels of a desperate series of steps taken by the Indian government as well as the central bank, aimed at reining in gold imports which is contributing to the rising current account deficit.
The World Gold Council said that they recognise the need for the recent government measures to contain gold imports, but warned that if such a strategy remains in place for long, it may lead to proliferation of the grey market, like it was before India liberalized gold imports about 15 years ago.
Indeed, there already reports of gold being traded in the black market in India.
Despite many regressive steps by the government and the RBI, there is no abatement in Indians buying gold in order to protect their wealth. The short panacea of increasing duties has led to short term falls in demand but demand has remained robust and is likely to do so as long as inflation remains stubbornly high.

Gold in Indian Rupees - (Bloomberg)
India's consumer inflation remained high at 9.39% in April while deposit rates in banks are between 6% and 8.5%.
People in India might be more inclined to save in rupees in banks if their deposits were protecting them from the ravages of inflation. They might also save in rupees and stop buying gold if the RBI was not debasing the currency.

IMF India Reserve Money in Indian Rupees - (Bloomberg)
India’s reserve money supply rose 7% in the last 5 months alone. Reserve money outstanding in India rose by a whopping 1 trillion rupees to 15.4 trillion rupees in the year to May 31 according to a statement by the RBI.
Politicians and bankers in India are quick to blame gold for India's current account deficit. Gold is just the monetary messenger and it is never wise to shoot the messenger.
While significant demand for gold can be seen as a problem from the current account point of view, gold is the messenger and it would be prudent to listen to the monetary message it is sending.
Rather than attempting to prevent people from buying and owning gold, politicians would better serve their citizens by creating a favourable climate for start up companies and entrepreneurs which would lead to exports and employment growth which will lead to healthier economies.
They should work towards having more efficient capital markets and safer, more prudent banks.
Finally, they should ensure that there are positive real interest rates that protect the savings and capital of families, pensioners and companies.
This would gradually lead to Indian people reducing allocations to gold and trusting rupee deposits and other financial assets.
Rising gold prices and people saving in gold are symptoms of deeper financial, economic and monetary problems and not the cause.
Governments, in India and internationally, need to manage their economies better and rein in inflation and make their currencies a store of value that people will trust.
People have made very steady returns on gold in the past 12 years compared to most other asset classes. People preferring to own gold over paper currencies have protected their savings from currency devaluations in recent years and will do so in the coming years.
Therefore diversification and ownership of gold should be encouraged rather than discouraged.
People who own gold will be seen as prudent in time ... much more prudent than those who discourage gold ownership or those who do not own any gold whatsoever.
NEWS
U.S. Mint Gold, Silver Coins Sales May Rise to Record This Year - Bloomberg
U.S. bullion coin demand still at ‘unprecedented’ levels - US Mint - Reuters
Gold Declines as Investors Weigh Stimulus, Indian Import Curbs - Bloomberg
Gold slips as India raises import duty - Reuters
COMMENTARY
Physical Gold Demand Substantial – FN Arena
The Roubini - Faber Gold Debate – Market Oracle
Simon Johnson: The Wall Street Takeover and the Next Financial Meltdown – 24hGold
Capital Controls Coming To $2.6 Trillion Money Markets - Reuters
For breaking news and commentary on financial markets and gold, follow us on Twitter.
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They shouldn't monetize gold, they should gold-ize money.
I'm amazed that the MSM can continue to sell the "uncertainty" of what the FED will do next. Taper? Pleeeease! Tapering will only begin when the bond market says it must begin.
Can anyone understand what economics teacher Roubini says? No wonder america is failing as numbnuts talks through his arse and nose! Hang that nasty piece of shit, Soros also!
I think we can surmise in whose controlling hands the World Gold Council lies.
correct title "a Too Big to Jail Bank will Re-hypothecate 20,000 Tonnes and Claim It is From India"
Where did 20000 come from? They must be totaling what their citizens own..India CB has what, 600 tonnes?
I doubt the Indian Central bank has any gold at all.
The average Indian is much more intellectually honest with themself about what a government is than people living in the west. Paying bribes daily helps. The average Indian owns gold specifically because they realize on a very deep emotional level that governments come and go but gold sticks around. Unlike the west Gold is instantly converted into any service, asset, or commodity you desire in India which is why people go to prison for smuggling it into India. Indans like and want gold, demand for it is insationable. Indians know gold is cash and folding fiat is TP. Before India floated their currency and the government kept the exchange rate artificially high (Unthinkable nowadays as all race to the bottom) Indian rupees were worth essentially nada in Hong Kong or Singapore. That wasnt that long ago and having your official .guv paper denied ANY value in the worlds commerce centers sticks with you and adds to the universal multi generational cultural perception as gold as money in India.
They aint giving it up.
There's a thesis circulating that the US and it's muppets and mouthpieces are looking for somebody to sell some gold; but not them; because Physical Supply really is getting embarrassing. "Helpful suggestions" may be offered to Germany, the EU, as well as India, along with whatever under the table arm twisting and foot stomping can be arranged.
Germany doesn't have any gold. They have an I.O.U.
SAT
I'm sure the USG would love for someone else to sell their gold. If it is such a trivial element why not just sell the 8133 tons they have?
Good luck with that.
From Roubini
Spotlight
Time to Offload and Underweight Gold
Gold skyrocketed to over $1,900 per ounce in the fall of 2011 from $800 in early 2009, but has since collapsed by around 27%. Why? We see seven main reasons:
1. Tail risks are lower. Gold tends to spike when the global economy faces severe economic, financial and geopolitical threats; but, thanks to a variety of policy actions, the tail-risks argument for holding gold is less compelling today than at any time since the start of the financial crisis in 2007. These tail risks have included a Greek exit from the eurozone (EZ) and the currency union’s eventual breakup; a hard landing in the U.S., exacerbated by a fiscal cliff; a hard landing in China; and a military conflict between Israel (and the U.S.) and Iran on the issue of nuclear proliferation.
2. Inflation is low and falling. Gold does best when there is a risk of high inflation, as it is a traditional store of value against inflation. But, despite the very aggressive monetary and quantitative easing from many central banks, global inflation is actually low and still falling as growth in most of the global economy remains below trend. There are some EMs where inflation has been high and rising but, in EMs, assets other than gold usually become a hedge against inflation. Only in rare cases (like India) does gold become a major hedge against inflation in EMs, usually because financial repression and capital controls restrict the real return on other domestic and foreign assets.
3. Other assets provide better returns. Now that the global economy is recovering, other assets, such as equities or even real estate, are performing much better than gold. Gold is only a play on capital appreciation; other assets provide both incomes and capital gains. Since the sharp rise in the gold price in early 2009, U.S. and global equities have vastly outperformed gold in terms of returns, as have long-term bonds.
4. Exit from ZIRP will be bearish for gold. Real interest rates and gold prices are highly inversely correlated. The majority of gold-price appreciation occurred as real interest rates (the difference between nominal interest rates and inflation) fell after successive rounds of QE from the Fed and other central banks, starting in late 2008. Although real rates are still negative, the more positive outlook for the U.S. and global economy implies that the Fed and other central banks will gradually exit from QE and ZIRP and real rates will rise over time.
5. Highly indebted countries are planning to sell their gold. Some argued that a world full of highly indebted sovereigns would push investors into gold as government bonds became more risky. Instead, these countries are likely to dump their gold reserves to reduce their debts, or at least are considering doing so. Indeed, news that Cyprus may sell a small fraction of its gold reserves triggered a 13% fall in the gold price in April, and there has been political discussion about whether Italy should sell a fraction of its stock of gold, which would further drive down the price.
6. U.S. dollar appreciation is bearish for gold. There is usually an inverse relationship between the value of the U.S. dollar and the dollar price of commodities, including precious metals like gold. Looking ahead, the relative strength of the U.S. economy and of U.S. asset prices compared with those of other DMs suggests that the dollar may appreciate—as it has done recently—against a basket of DM currencies.
7. Gold has been hyped for irrational political reasons. Some extreme politically conservative gold bugs think that all government is evil, that there is a government conspiracy to expropriate most private wealth and that gold is the only hedge against this risk. This group also believes that we will return to the gold standard as central banks “debase” paper money and as hyperinflation ensues. However, inflation is falling globally and gold is not in any way a currency. A currency has three functions: a means of payment; a unit of account; and a store of value. Gold may be a store of value for wealth, but it is not a means of payment, nor is it a unit of account.
The issue is not whether or not investors should have gold in their portfolios, but rather whether gold should be overweight, market-weight or underweight. The gold-price fundamentals did partially justify an overweight in gold until 2011; but, since then, these seven factors suggest an underweight allocation to gold in investors’ portfolios. The price of gold may temporarily rise in the next few years, but it will be very volatile and trend lower over time as the global economy slowly mends. We expect gold to go to $1,300/oz by end-2013 and $1,000/oz by 2015. For the most part, it is time to offload and underweight Keynes’s “barbarous relic.”
Pied Piper 2.0.
I like the way all of his claims have merit, if only the underlying assumptions were still true. Lower tail risks, what a hoot!
Good luck in swallowing what Roubini said.
Tail risks are NOT lower. Iran is still in play (although I believe that was more hype than anything) but Syria (with Russia, the U.S. and Israel butting heads) is becoming riskier.
The Euro is still in trouble (although I believe it will not be allowed to fail) and certain countries are as bad off/worse than Greece.
The dollar is only stronger because other currencies are so much weaker.
And on and on....
surfersd...we see the world very differently. I just don't see the rosy picture you do.
'Good Luck" will not be needed. For the paper markets to function GOLD MUST FLOW!!! If the sellers quit selling at these silly low prices then the COMEX, LBMA, futures, forwards, swaps and ETFs will all die a sudden death. All it takes is one guy running out of the LBMA shouting 'they are out of gold!' and poof...the illusion of the paper market will vanish.
also...you say 'A currency has three functions' ...I think you mean money has 3 functions. A currency is not a store of value...not to me and not to any of those living in parts of the world where currencies are printed to death frequently.
Any plans dealing with gold, while the mechanism that prices it, is as it is...are foolish.
We have a wealth asset that is priced as a commodity by a paper mechanism which can be seriously effected by someone with as little as a billion dollars (the estimate of margin required to cause the April 12 and 15 declines.)
When this mechanism finally fails (and it will....soon)....well, then we can discuss gold. In the future gold will mean the real physical stuff. Paper gold is about to go away....soon...
Yeah, that's the problem. the perception that Gold is just anothing form of frozen pork bellies; but it isnt' It doesn't function by supply and demand; it functions by demand and price.
Methinks even the lowest caste Indian would tell them to take their paper gold instruments and shove them. Boy are the banksters getting desperate or what? The global supply must be really tight. What, no more countries like Libya or Cyprus to steal from? When do we invade Iran or the Emirates?
Well yeah...
India Should Monetise 20,000 Metric Tonnes Of Gold
That’s assuming India’s politicians and policy makers have their nation’s best interests as a primary concern..
a big stretch for almost anyone involved in policy or politics anywhere in the world nowadays.
So... did the WGC wind just change direction?
Also, convertiblility is the only way I know of to properly monetize gold. Which, of course, is why that's likely not the WGC plan.
I am sure that this is just a ploy to steal the gold from India.
Gresham's law would fuck India in the ass unless rupees were non-convertible to fiat currencies.
Me too.