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Silver is winning India’s “War on Gold”

Sprott Group's picture




 

As India continues to wage war with gold, investors are seeking out the yellow metal through any means available. Reports today suggest that there is not enough room on commercial flights into Dubai for all those investors seeking to purchase gold. “I cannot find a place for transporting gold on Emirates, on BA or Swiss Airlines this weekend,” lamented Tarek El Mdaka, the managing director of Kaloti Gold in Dubai adding he is shipping as much as 2 tonnes of gold every day.1 As we had suspected, it would appear that the Indian gold trade has moved offshore to avoid the restrictions on imports and extra taxes imposed. However, this is not the biggest change in the Indian precious metals market – silver imports have exploded.

Silver has not been exposed to the same import restrictions that gold has and recent silver import figures confirm that investors have flocked to silver, likely as a substitute for their desire for gold. And why shouldn’t they? With limited bank branches in the country, owning precious metals is synonymous with savings and security. While it seems that the larger investors have moved their gold purchases offshore, we suspect that the majority of Indian investors have turned to silver as a substitute for gold. The recent import numbers are staggering.

While India imported 1,900 tonnes of silver in 2012, in the first five months of 2013 alone, imports have touched 2,400 tonnes. According to industry estimates, silver imports during the January-March quarter stood at 760 tonnes. Imports shot up to 720 tonnes in April alone, and in May they further swelled by 920 tonnes.2 Let’s put these numbers in perspective, according to the Silver Institute, the world produced 24,478 tonnes of silver in 2012, implying that Indians have imported almost 10% of world production so far this year. If they continue to import at the same rate as they have in May, over the next 12 months India could import close to half of world silver production which is a truly staggering shift in demand for silver.

The next salvo in the war on gold occurs this Monday July 1st when “The All India Gems and Jewellery Trade Federation” (representing 90% of jewelers in India) declares a ban on its members selling gold bars and coins. It’s almost unbelievable that this retail federation would impose an all-out ban on purchasing gold for investment purposes, but all is fair in love and war. However, Indians aren’t phased and are shrugging off this ban and investing their rupee’s in silver instead.

This new import data shows that the victor in India’s “War on Gold” – will be silver.

 


1 Gold rush 2013 style has Dubai scrambling. http://www.thenational.ae/business/industry-insights/markets/gold-rush-2013-style-has-dubai-scrambling#ixzz2XTAh0M1K

 

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Wed, 07/03/2013 - 07:24 | 3717094 Mr. Hudson
Mr. Hudson's picture

Gold and silver will spike higher. What is the plan for those holding onto gold and silver? At some point do you sell? If we have total, complete financial collapse, will it be safe (and legal) to own (or hoard) gold and silver?

Tue, 07/02/2013 - 18:10 | 3715488 KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  .

 

 

 

Silver Bitchez  !

Tue, 07/02/2013 - 16:51 | 3715199 toadold
toadold's picture

Where can I buy some Indian penny stocks?

Tue, 07/02/2013 - 21:05 | 3716109 WmMcK
WmMcK's picture

Don't know, but I have 400 Indian Head pennies for sale.

Will trade for Ag.

Tue, 07/02/2013 - 16:45 | 3715181 assistedliving
assistedliving's picture

i did tell the mrs we bought some HL today at $2.82

i didnt tell her we own 50k @ $6

Tue, 07/02/2013 - 16:36 | 3715159 thewayitis
thewayitis's picture

 

 GOT SILVER?   Slver.....Its what is for breakfast. Breakfast of champions......

 

 

Tue, 07/02/2013 - 15:32 | 3714937 janchup
janchup's picture

"Indians aren’t phased..." 

Sprott, the word is fazed.

Tue, 07/02/2013 - 16:45 | 3715183 coolpajim
coolpajim's picture

Though I agree the meaning would be enhanced by the use of "fased", it is also probably true the Indians were not "phased".

Tue, 07/02/2013 - 17:32 | 3715341 Dr. Sandi
Dr. Sandi's picture

I won't be concerned until Indians buying PMs are 'phasored.' That would indicate a rather unhealthy trend.

Tue, 07/02/2013 - 14:20 | 3714629 MeelionDollerBogus
MeelionDollerBogus's picture

silver vs gold, recent price action correlation:

http://flic.kr/p/f17z1s

Tue, 07/02/2013 - 14:19 | 3714625 toadold
toadold's picture

At one time I had Zero Hedge bookmarked in my Finance folder, then I moved it over to my Poiitics folder.....Should I go aheand and move it over to my Entertainment folder?  The business reporters, the politicians, and the banking officials are starting to get kind of entertainig in in their explanations.  "Damn it don't look at the prices of prescious metals over decades and centuries, all that counts is the last year!", "No Marvin what counts is the last 5 minutes!"

Is Walmart or Sam's selling PM's yet?

Tue, 07/02/2013 - 13:41 | 3714528 El Oregonian
El Oregonian's picture

Silver Bullets KILL Bankster Werewolves.

Tue, 07/02/2013 - 14:10 | 3714602 bjfish
bjfish's picture

And you can buy silver bullets at  NWTmint.com.  (for real)  This is just FYI - I'm not pitchin for them.

Tue, 07/02/2013 - 16:07 | 3715076 cynicalskeptic
cynicalskeptic's picture

You may be dead before you get your ammo......  not ther fastest when it comes to shipping

Wed, 07/03/2013 - 01:34 | 3716794 mt paul
mt paul's picture

bought some 375 H+H rounds today

3.50 each x 200..

 

squirrel problems...

Tue, 07/02/2013 - 13:15 | 3714438 WTFUD
WTFUD's picture

Silver&Gold; Horse&Cart; Republicans&Democrats; Love&Marriage

Tue, 07/02/2013 - 12:45 | 3714346 MrBoompi
MrBoompi's picture

At these prices miners can't afford to produce silver for much longer.  When supply completely dries up, will people finally tell the paper pushers and their ridiculous spot prices to go to hell?

 

 

Tue, 07/02/2013 - 13:23 | 3714464 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Future contracts come due the miners will not negotiate for lower than production cost. Watch and see. The markets are going to split and hell breaks loose in the paper market once that happens.

Tue, 07/02/2013 - 12:23 | 3714277 unwashedmass
unwashedmass's picture

i'm going to wait till the scheduled metals bash post jobs number friday. then, at 8:31, i will start my truck backing in. 

and can we all say how utterly insane it is that we all KNOW now that Friday will be a major manipulation day? I mean the fraud is now so staggering, so blatant.....

Tue, 07/02/2013 - 13:05 | 3714401 StarTedStackin'
StarTedStackin''s picture

I'm in the same boat so to speak

Tue, 07/02/2013 - 12:53 | 3714364 GoldForCash
GoldForCash's picture

A+on learning to BTFD's

Tue, 07/02/2013 - 12:07 | 3714211 AustrianJim
AustrianJim's picture

>>Indians aren’t phased

 

fazed

Tue, 07/02/2013 - 15:31 | 3714934 Imminent Crucible
Imminent Crucible's picture

HaHA! A spelling Nazi. I'm sure that he meant "Indians are phasing out of gold, into silver".

I'm glad you corrected that so I didn't have to be the spelling Nazi.

Tue, 07/02/2013 - 18:40 | 3715610 TheFourthStooge-ing
TheFourthStooge-ing's picture

The Indians are neither phased nor flanged. They're using a Leslie speaker unit.

Tue, 07/02/2013 - 11:44 | 3714112 NidStyles
NidStyles's picture

I bought last week, and will be buying more again this week. I'm on the Silver train 100% now. It's too good of a deal at sub-20 and still good at 25.

Tue, 07/02/2013 - 19:58 | 3715883 MeelionDollerBogus
MeelionDollerBogus's picture

I think with how low prices dropped I'm hoppin' on the gold train myself.

Tue, 07/02/2013 - 12:15 | 3714245 Skin666
Skin666's picture

Read Two Short Planks blog on investing in gold and silver NidStyles...

http://twoshortplanksunplugged.blogspot.com.au/2013/05/gold-silver-real-...

I've scaled back silver and concentrated more on Au...

 

Tue, 07/02/2013 - 18:38 | 3715604 Meatier Shower
Meatier Shower's picture

As long as the gold/silver ratio is a ridiculous 64, silver is the better value.

Tue, 07/02/2013 - 19:44 | 3715845 StarTedStackin'
StarTedStackin''s picture

that's my reading

Wed, 07/03/2013 - 01:07 | 3716779 Lord Koos
Lord Koos's picture

Yeah the ratio is pretty stretched.  But I think it's more likely that gold will go down for a time before silver will go up. The industrial demand for silver is going like copper -- down.

Tue, 07/02/2013 - 11:31 | 3714065 Eagle Keeper
Eagle Keeper's picture

Maybe we're not at the bottom, but I just took this opportunity to stack a few more.....

Tue, 07/02/2013 - 11:22 | 3714023 joak
joak's picture

This data convinced me to buy some more coins last week-end, although I usually buy gold (because of taxes on silver). I wish I had more fiat to spend.

Tue, 07/02/2013 - 15:06 | 3714843 WTFx10
WTFx10's picture

I wish I had more fiat to exchange for something of value.

Fixed it.

Tue, 07/02/2013 - 10:51 | 3713904 RaceToTheBottom
RaceToTheBottom's picture

Yep, keep trying to squeeze that overinflated balloon......  Oh, it is expanding over here...  Now over here....

Tue, 07/02/2013 - 12:14 | 3714239 PT
PT's picture

You'd better blow some more air into it.  That'll stop it from turning into a bubble ...

Tue, 07/02/2013 - 10:41 | 3713881 becky quick and...
becky quick and her beautiful mouth's picture

seriously, if you are not buying silver at $20 and change, you are retarded.

Tue, 07/02/2013 - 18:53 | 3715658 BidnessMan
BidnessMan's picture

Wish my usual silver seller had some to sell.

Tue, 07/02/2013 - 18:21 | 3715539 Debeachesand Je...
Debeachesand Jerseyshores's picture

I have to agree with you that Silver at $20 is a bargain.

Tue, 07/02/2013 - 13:29 | 3714491 GrinandBearit
GrinandBearit's picture

I was telling people that when it was $5.00. 

I was buying 90% bags then and no one wanted them.

Tue, 07/02/2013 - 13:47 | 3714544 shutdown
shutdown's picture

I was telling people that at $35.00.

Tue, 07/02/2013 - 15:04 | 3714833 Troll Magnet
Troll Magnet's picture

Sprott was telling people that at $45.  Behind the scenes, Sprott was dumping silver like a MOFO.

 

FUCK ERIC SPROTT and his Goldman Sachs-wannabe ass.

Tue, 07/02/2013 - 21:09 | 3716121 WmMcK
WmMcK's picture

I'll be telling people that at $50.36 and beyond, they still will not listen, though.

Tue, 07/02/2013 - 16:28 | 3715131 tmosley
tmosley's picture

God forbid people make money on trading while promoting a secular trend.

Tue, 07/02/2013 - 18:57 | 3715669 Papasmurf
Papasmurf's picture

It's one thing to make money trading.  It's quite another to pump while you dump.

Tue, 07/02/2013 - 11:29 | 3714049 gaoptimize
gaoptimize's picture

Yep, I have a joyous little DS boy who doesn't concern himself with the PM market at all while I back up the truck.

Tue, 07/02/2013 - 13:15 | 3714436 Silveramada
Silveramada's picture

bottom 18.50 silver and ~1200 gold on record 6-26-13...we may be out of the woods or another leg down, before shooting to the moon???

 

http://zysites.com/silververitas/

Tue, 07/02/2013 - 11:41 | 3714104 Herd Redirectio...
Herd Redirection Committee's picture

SLW is a heck of a buy here.  Not investment advice, DYODD

Tue, 07/02/2013 - 10:41 | 3713879 GubbermintWorker
GubbermintWorker's picture

Hi Ho Silver!!

Tue, 07/02/2013 - 18:10 | 3715482 Frank N. Beans
Frank N. Beans's picture

hi YO silver, away!

Tue, 07/02/2013 - 12:55 | 3714368 GoldForCash
GoldForCash's picture

UpUp and awayyyyyyy

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