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India Trade Deficit Deteriorates As Gold Imports Soar 138%

Tyler Durden's picture




 

India's economic boogeyman, the monthly trade deficit, continues to rear its ugly head, this and every time, driven be the country's insatiable desire for gold which is so powerful, the country took full advantage of the plunge in gold prices, and saw business imports of gold soar by 138% y/y in April, forcing the trade deficit to hit a 3 month high of $17.8 billion as more fiat left the country in return for bringing in more of the "barbarous relic." Gold imports more than doubled on both a Y/Y and sequential basis, with gold accounting for $7.5 billion, or 18% of total imports, compared to $3.1 billion in March.

From Goldman:

 

Main points:

 

India's trade deficit worsened more than expected to US$ 17.8 Bn in April after a sharp improvement in March, as per provisional data from the Ministry of Commerce and Industry.

 

The surprise came from an increase in imports, led by a sharp increase in gold/silver imports which increased by 138% yoy in April. Gold imports in April were $7.5 billion, compared to $3.1 billion in March. This was driven by the sharp fall in gold prices during the month. Oil imports growth also recovered to 3.9% yoy after a sharp fall of 16.6% yoy in the previous month. However, imports growth declined sequentially.

 

Export growth moderated to 1.6% yoy suggesting a weaker external demand environment in April. On a qoq basis, exports were up 3.6% sa, the same as in March.

It wasn't only India where demand for gold manifested itself in the economic bottom line. Here is how gold lead to a push in Chinese retail sales:

Sequential mom in April fell to negative territory, which reflects weak aggregate demand growth. Because last April saw one of the softest sequential mom growth momentum on record (including late 2008), the yoy growth of IP was up slightly. Heavy industry IP rebounded to 9.6% yoy in April from 9.1% yoy in March, while light industry IP rebounded to 8.5% yoy in April from 8.2% yoy in March.

 

The slight rebound in retail sales was boosted by higher consumer prices, the rush to buy gold, which occurred towards the end of April (April jewelry sales was 72% yoy, up from 17.7% in January-March period), and strong automobile sales (which accelerated to 13.4% yoy from 10.7% in March). This is partially offset by the continued moderation in the sales of the catering industry, which saw its growth fall to 7.9% yoy from 8.7% yoy in March.

And form SocGen:

Following a sharp decline in the gold price, Chinese households’ purchase of jewellery surged 72% yoy in April, substantially faster than the 17.7% yoy in Q1. This gold rush contributed nearly 2ppt to the headline in April, up from about 1ppt in March.

So a surge in gold demand is suddenly... good economic news? Funny how that works.

As long as the price suppression of paper gold prices continues, don't expect any notable changes to both of the above trends.

 

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Mon, 05/13/2013 - 08:30 | 3555681 francis_sawyer
francis_sawyer's picture

MOAR gold going underground... Pretty soon, all the ABOVEGROUND gold in the world is going to be UNDERGROUND [in China, Russia, & India], &, of course, at the bottom of waterways where ZH'ers once sailed ships...

Mon, 05/13/2013 - 08:43 | 3555708 espirit
espirit's picture

...long scuba gear.

Mon, 05/13/2013 - 08:59 | 3555757 Long-John-Silver
Long-John-Silver's picture

and heavy equipment

Mon, 05/13/2013 - 09:45 | 3555887 Seasmoke
Seasmoke's picture

Long Atlantis.

Mon, 05/13/2013 - 14:24 | 3557107 Bam_Man
Bam_Man's picture

Severe, permanent backwardation, bitchezzzz!!

Mon, 05/13/2013 - 08:30 | 3555683 LawsofPhysics
LawsofPhysics's picture

Physical demand is up, yet the paper price is down.  Free "markets" at work < snicker snicker >.  So many paper promises and unfunded liabilities, so little real assets... 

I remain long black markets and sharecropping.

Mon, 05/13/2013 - 11:08 | 3556178 Mr. Magniloquent
Mr. Magniloquent's picture

A rumor has been floating for a day or two about the University of Texas sold $375,000,000.00 of their phyiscal gold and used the money to reinivest mostly in equities, along with $75,000,000.00 in paper gold futures. They still have not taken delivery of what remains of their billion dollar hoard.

Mon, 05/13/2013 - 08:30 | 3555684 Quinvarius
Quinvarius's picture

They need to stop classifying gold as an "import" and then they can stop pretending it is hurting them.  It is money.  Accept it.  It is no more an import than an Indian bringing Euros or Yen into the country.  And it makes the country richer, so stop complaining Indian Central Bank.

Mon, 05/13/2013 - 08:34 | 3555691 LawsofPhysics
LawsofPhysics's picture

Yes but even the Indian Central Bank can't "print the gold out of thin air", hence the wealth is going to the people who hold the gold and not the bank.  Money is irrelevant, this is about power and control, central banks are trying to maintain power and control, period.

Mon, 05/13/2013 - 09:02 | 3555769 Long-John-Silver
Long-John-Silver's picture

One day the people will stop accepting the Central Banks paper and will only accept Gold and Silver.

Mon, 05/13/2013 - 08:40 | 3555693 francis_sawyer
francis_sawyer's picture

Well ~ Whichever way you slice it... India, China, & Russia all have nukes [so I doubt they're on the short list to be paid the Nobel Prize winning 'FREEDOM VISIT' by Herman, Lily, Grandpa, or even Eddie Munster]... Note: I purposefully left out 'Marilyn'... Ain't no 'Pat Priests'** in that cast of characters...

~~~

**What can I say?... Good enough for Elvis... [& look!... all the gold is still on that boat]...

http://elviswomen.greggers.net/images/easygo.jpg

Mon, 05/13/2013 - 09:20 | 3555818 forwardho
forwardho's picture

francis, thanks for comments on the  discussion of the new  anti discrimination ZH policy.

That I do not always agree with other posters here is why I come., other viewpoints.

I understand ZH is a commercial enterprize, it exists to make a profit. Spending millions fighting lawsuits can quickly take a cut into those profits.

In todays world free speach has a cost.

Mon, 05/13/2013 - 10:23 | 3555962 francis_sawyer
francis_sawyer's picture

The tireless & ever-flailing tentacles of Squeaky McWheel & the Yodelers know no boundaries...

Mon, 05/13/2013 - 08:34 | 3555694 Never One Roach
Never One Roach's picture

China and Singapore are pretty smart...they encourage their people to buy all the gold they can...of course, it's good for the government too if their people bring moar of the yellow metal into the country increasing the entire wealth.

Mon, 05/13/2013 - 08:47 | 3555718 Cookie
Cookie's picture

Singapore? Do you have a link?

Mon, 05/13/2013 - 09:05 | 3555771 MythicalFish
Mon, 05/13/2013 - 09:39 | 3555870 Cookie
Cookie's picture

Thanks

Mon, 05/13/2013 - 08:38 | 3555700 fonzannoon
fonzannoon's picture

I can't reconcile something. Somebody help me out.

There seems to be a consistent drawdown of the physical gold inventory's in the bullion banks and the Comex. It's been going on for weeks now. Supposedly the big money has figured out the game is up and is scrambling to claim ownership. Kyle Bass famously said the Comex claimed that if 4% of the people asked for delivery "price would solve everything".

So at this point, 4% have not asked for delivery? The inventory is so small, and the drawdown has been so large, yet we have not hit 4%? It sure as hell seems like that tiny fractional number necessary to end up defaults taking place should have been hit by now.

Or are they already settling in cash behind the scenes?

What am I missing?

 

Mon, 05/13/2013 - 08:47 | 3555717 Debugas
Debugas's picture

it has not been hit and not going to be hit any time soon because most of the market players are there for paper and not interested in physical delivery at all

 

Mon, 05/13/2013 - 08:50 | 3555726 LawsofPhysics
LawsofPhysics's picture

true enough.  For many of these paper-pushers it's really about flux and flow.  If the money stops flowing, they go bankrupt.  It's about making deals, keeping the paper moving and keeping that country club membership.

Mon, 05/13/2013 - 08:57 | 3555730 fonzannoon
fonzannoon's picture

That unfortunately, makes sense.

Although to accept that premise, seems to accept that everything we have been hearing about is basically bullshit.

Mon, 05/13/2013 - 08:49 | 3555721 Winston Churchill
Winston Churchill's picture

The bullion banks are moving gold across from registered gold accounts to cover the

withdrawls.A game that cannot go on for long.This was exactly what caused 2008,collateral

(MBS notes)being used multiple times, and then again in the REPO market.

This will not end well.My guess is September will be an interesting month.

Mon, 05/13/2013 - 08:49 | 3555723 espirit
espirit's picture

They're settling for fiat behind the scenes, after all it's free.

Mon, 05/13/2013 - 09:01 | 3555768 forwardho
forwardho's picture

Wonder what the premium is the banks are paying these folks to take the fiat and go away quietly?

Mon, 05/13/2013 - 14:13 | 3557045 constantine
constantine's picture

The gold drawdown in the vaults is a different situation than the futures contracts. People are just taking the physical gold they already owned out of JPM's vaults. The 4% that you're mentioning would refer to open contracts that had never been delivered in the first place.

Mon, 05/13/2013 - 10:37 | 3556027 H_Manatee
H_Manatee's picture

Indian govt. hasn't got enough to buy petrol (only 550 tonnes). That's the problem. hence they want to preserve foreign reserves. On the other hand households have loads but govt. can't go on confiscating it without causing the entire hell to break loose.

 

Ironically though most of this household gold (nearly 20K tonne) is in the public sector banks but customers have got their own key. But still easy for the govt. to confiscate in the doomsday scenario in exchange for a worthless paper money they call rupee which has been diluted 15% annually since 2004 just to keep in line with bernake's printers.

Mon, 05/13/2013 - 08:31 | 3555685 MFLTucson
MFLTucson's picture

See this Ben, this country full with educated people does not trust you and the rest of your fiat cabal.

Mon, 05/13/2013 - 08:32 | 3555689 new game
new game's picture

do you believe any of this shit? i don't.

its all bullshit, demand up price down-yea right...

 

Mon, 05/13/2013 - 08:32 | 3555690 observer007
observer007's picture

GERALD CELENTE: PRICE OF GOLD IS RIGGED

 

Gerald Celente comments on gold market rigging, among other things. Celente says: "Why aren't gold and silver prices going up? They should be. Everyone knows that game is rigged. I believe that the Federal Reserve and the other central banks are manipulating the prices to keep interest rates low."

 

http://hom-celente-goldwar

Mon, 05/13/2013 - 08:36 | 3555698 rogeliokh
rogeliokh's picture

Does anybody have a clue why $USD going up lately against every currency?

What this all about? Sudden run, based on what? Coming war? Market collapse?

What is the story?

Mon, 05/13/2013 - 08:40 | 3555702 espirit
espirit's picture

Fastest horse in the glue factory.

Mon, 05/13/2013 - 08:41 | 3555705 LawsofPhysics
LawsofPhysics's picture

Dollar consolidation/backwardation, Japan is crushing the Yen, others are destroying their currencies as well.  South American countries in particular (whom we trade with).  Get to work Mr. Chairman!!!

Mon, 05/13/2013 - 08:42 | 3555706 fonzannoon
fonzannoon's picture

Here is what I think it is about, and it's why I take the whole gold story with a grain of salt.

The U.S has spent how many bazillions of dollars on the MIC? What we lack in physical gold, we more than make up for with military muscle. I don't think the U.S has built up it's military presence this much only to get a case of whiskey dick when the idea of a gold default takes a shot at bringing down the dollar. The rest of the world knows it too.

Mon, 05/13/2013 - 09:19 | 3555810 Quinvarius
Quinvarius's picture

So you are saying that because we print so much money trying to maintain a giant military, the money we print to maintain that military hold's value?  Military force is not a financial asset.  It is a cost.  No matter what any deflationist nutjob or neocon wonk says, we are heading into massive inflation.  If the governmnet wishes to mandate offical price levels or intervene in markets, then there will be no official markets.  We will get Soviet style super-markets.  Low prices and no food.  Don't kid yourself that just because process gives you time to prepare that it is not taking place.

Mon, 05/13/2013 - 09:25 | 3555829 fonzannoon
fonzannoon's picture

I totally believe the soviet style of everything is coming, and a good deal of it is already here.

If you are dealing with low prices and no food, then you are saying there will be other places to buy food using PM's? Otherwisewhat good do PM's do in that scenario?

Mon, 05/13/2013 - 09:32 | 3555850 Quinvarius
Quinvarius's picture

You buy stuff with them on the black market or you leave the country with them and use them in a real economy.  No one believed the Ruble was worth anything.  It was just a ration card for the fake economy.

You have to accept that your real money might not show up on your offical scorecard until after the government tries to harness it's stability to save itself.

Mon, 05/13/2013 - 09:34 | 3555857 fonzannoon
fonzannoon's picture

You mean after the revalue? I agree with that as well. Do you have a guess as to my question above? I'm interested in hearing what you think

Mon, 05/13/2013 - 10:34 | 3556023 SilverSavant
SilverSavant's picture

There are always other places to buy anything with gold and silver, with the exception of the time before people.

Mon, 05/13/2013 - 13:03 | 3556645 silvermail
silvermail's picture

@ fonzannoon

Oh, yes, I understand - the military might of the U.S. against the savages in Afghanistan or Iraq - it's certainly very cool!
But what can the United States against countries such as India, China or Russia?
I may remind you, as China by military force, has forced the U.S. military spy plane, make landing on the Chinese airfield. After China announced about this plane like our "war booty".
 And then China refused to hand over this aircraft to the United States, ignoring any demands and protests in Washington.
And I remind you, as China was knocked out (blinded) an American military satellite, after a warning to the United States, on the inadmissibility of space espionage against China.

- How do you imagine a war in which casualties, will be millions U.S. people?
- How do you imagine a war in which the United States will lose over a very short period, two or three aircraft carriers?

Mon, 05/13/2013 - 08:49 | 3555722 Debugas
Debugas's picture

USD is up because most of the debt is denominated in USD and borrowers scramble to get USD to repay their debts

Mon, 05/13/2013 - 08:41 | 3555704 horot
horot's picture

"GERALD CELENTE: PRICE OF GOLD IS RIGGED"

 

That con will only keep going until bernanke and cronies are out from their office.

Mon, 05/13/2013 - 14:20 | 3557086 Bam_Man
Bam_Man's picture

I think Celente just had his nineteenth nervous breakdown. But at least he's right about the gold price being rigged.

Mon, 05/13/2013 - 08:44 | 3555710 fonzannoon
fonzannoon's picture

Retail sales just beat. Everyone back to work. It's all good.

Mon, 05/13/2013 - 08:44 | 3555711 apberusdisvet
apberusdisvet's picture

The next false flag will be a dirty nuke on Ft Knox by "terrorists", domestic preferably.   This will ensure that the facility will not be audited for at least 1000 years.

Mon, 05/13/2013 - 08:51 | 3555729 forwardho
forwardho's picture

The increase in puchases of stategic assets is a profound indicator of "State" confidence.

Gold and Oil = Cash and energy.

Ultra bottom line needs.

Mon, 05/13/2013 - 08:54 | 3555744 e-recep
e-recep's picture

the west is dumping paper gold faster than the east is buying physical, so the price is downtrending. and meanwhile bars and coins move east, slowly but steadily.

Mon, 05/13/2013 - 08:56 | 3555750 orangegeek
orangegeek's picture

The Indians and Chinese are buying gold like mad - so the price should be rocketing, right?

 

But it's not.  Someone must be selling.  Spot Gold daily looks short term bearish.

 

http://bullandbearmash.com/chart/spot-gold-daily-falls-sharply-recover-g...

Mon, 05/13/2013 - 09:03 | 3555772 Loophole
Loophole's picture

I agree with those who say that the trade deficit is a phony bugaboo. It's only TRADE, something each side engages in because it's mutually beneficial. Whatever "problems" it may be causing is the result of govts and central banks printing money.

Mon, 05/13/2013 - 09:05 | 3555775 new game
new game's picture

all this bullshit has got me, doubting tom, doubting whether doubting thomas was a doubter..

Mon, 05/13/2013 - 09:06 | 3555778 s2man
s2man's picture

So, India, don't count gold as a commodity, count it as a currency in your forex reserves. Just trading rupees for gold. Viola! No more deficit!

Mon, 05/13/2013 - 09:35 | 3555858 shovelhead
shovelhead's picture

Indians are smart trading paper for gold and not playing the bankers game.

Expect higher gold import taxes and wealth taxes.

This 'War against Fiat' will not be tolerated and they will use the guise of fighting trade deficits.

Hold fast India. You'll win in the end.

Mon, 05/13/2013 - 09:45 | 3555883 Xue
Xue's picture

Gold imports should be considered as trade surplus.

Mon, 05/13/2013 - 10:25 | 3555966 sudzee
sudzee's picture

Is paper gold still being accepted as collateral or is it just a piece of paper sold by the big boys???

Mon, 05/13/2013 - 10:52 | 3556112 Wraithlord
Wraithlord's picture

Which Central Bank would be willing to admit that its fiat is worthless? 

None of course...

http://www.business-standard.com/article/economy-policy/rbi-puts-restrictions-on-gold-imports-by-banks-113051300446_1.html 

 

 

Mon, 05/13/2013 - 11:54 | 3556361 Village-idiot
Village-idiot's picture

About a month ago I read an estimate of how much gold is privately held by Indian citizens.

Around 20,000 tonnes accumulated over centuries and passed down within families. It's almost impossible for the government to tax it away; they can only openly steal it. A valuable lesson for all of us in the west.

Power to the people!

Mon, 05/13/2013 - 13:11 | 3556675 evernewecon
evernewecon's picture

 

 

 


 

A rather simple example of negative a current

account or net capital outflow reflecting a

(potentially) worthwhile investment, eh?

Just like educating instead of incarcerating

or indebting can be a worthwhile investment.

 

http://works.bepress.com/robert_ashford/1/ 

"Systemic Poverty as a Cause of Recessions"

Max Keiser Has Called The Free Reserves

For TBTF Banks/No Saving Income For You

Financial Apartheid.  

What’s This But Self-Immolation For A

Nation, Not Counting The Immolator.

The Converse:  Persons Self-Immolating

In Protest?

Mon, 05/13/2013 - 13:36 | 3556807 adventure007
adventure007's picture

The masses have already started complaining. Strikes every where all across major cities in India. Inflation is kicking in. Huge property and land bubble and destroying the middle class and their purchasing power.

http://www.dnaindia.com/mumbai/1833738/report-mumbai-wholesalers-to-continue-strike-against-lbt

http://www.ndtv.com/article/india/bihar-transporters-to-join-strike-called-by-aimtc-from-april-1-347158

http://timesofindia.indiatimes.com/topic/Air-India-strike

In 1999, when I went to the super market with my father as a kid - 100 Rs ~ approx $2 would buy you chicken, veggies and fruits for 2 days for a family of 3 to 4. Today, the same costs you upwards of Rs 1200 ~ approx $24. 

US has been exporting inflation through the a$$hole FEd and all the 7+ trillion confetti dollars will come back and create inflation spike in US. Fuck all these central bank governors

http://www.centralbanknews.info/2013/04/list-of-central-bank-governors.html

 

 

 

Mon, 05/13/2013 - 14:17 | 3557070 Bam_Man
Bam_Man's picture

At least they will have Gold to show for it. All we have is tons of cheap (and often toxic) Chinese junk.

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