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Gold Price Premiums Hit Record In India: 8% Above London Spot

Tyler Durden's picture




 

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

This story is just further proof of the complete and total mess that has been made of the Indian gold market over of the course of this year due to government intervention. We noted 2 days ago that the premium for physical was rising, but now it is at a record. The other part of the problem is that when you are dealing in physical supplies you can’t just deliver paper contracts. Somehow I don’t think that would cut it for Indians on festival days or their daughters’ weddings.

From Reuters:

(Reuters) - Gold premiums in India, the world’s biggest buyer of the precious metal, hit a record $100 an ounce, about 8 percent over London prices, on a shortage of supplies to meet festival demand, traders said on Tuesday.

 

“There are no supplies in the domestic market, and there is a little demand due to festivals… what little supplies that come, go to exporters,” Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF) told Reuters.

 

Most suppliers in Mumbai and Kolkata have started quoting premiums in excess of $100 an ounce above London prices, more than double the $40 charged last week, Bamalwa said.

 

Gold imports have virtually dried up in India after the federal government introduced the 80/20 rule, creating confusion among government officials on its implementation and halting shipments for about two months.

 

The World Gold Council has said India’s gold demand could rise as much as 15 percent this quarter to 300 tonnes as pent-up demand following a good monsoon keeps the country on track for yearly demand estimated at 1,000 tonnes.

If that demand number is correct, then India and China alone are on track to consume 75% of the world’s total gold production in 2013. Fortunately for them, Western investors are more than comfortable accepting pieces of paper.

Full article here.

 

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Wed, 10/16/2013 - 17:05 | 4062326 LawsofPhysics
LawsofPhysics's picture

Barbarians!!! 

1) BTFD (in paper)

2) wait for the idiocracy to set in

3) take profits

4) wait for next smash down (in paper)

5) take delivery (of physical)

rinse and repeat.

Wed, 10/16/2013 - 17:07 | 4062341 tsx500
tsx500's picture

wake me up at gold 5000 .   yawn.

Wed, 10/16/2013 - 17:11 | 4062352 Dear Infinity
Dear Infinity's picture

I feel bad for these people, they are up against the true meaning of FIAT. At least here stateside you can still buy a Gold American Eagle for about 4% premium to spot (see: www.CompareGoldPrices.com) -- but truly the import taxes, etc are the last gasping breaths of a ruling class running scared.

Wed, 10/16/2013 - 17:13 | 4062366 negative rates
negative rates's picture

We are the biggest fools in the world too, the paper chase proves it.

Wed, 10/16/2013 - 18:49 | 4062744 Stuart
Stuart's picture

miners need to charge their own price, separate and removed from paper driven prices.   Time to break free from paper price rigging and take control.   

Wed, 10/16/2013 - 21:39 | 4063406 Rory_Breaker
Rory_Breaker's picture

I'm so glad I bought some on Sunday. The jewellery stores in Mumbai are still packed with customers.

Wed, 10/16/2013 - 21:41 | 4063412 TwoShortPlanks
TwoShortPlanks's picture

$3,000/oz with a 50% premium is still a good price to pay....in light of recent events!

http://twoshortplanksunplugged.blogspot.com.au/2013/10/gold-backed-global-sdr-hegelian.html

Wed, 10/16/2013 - 17:20 | 4062382 DoChenRollingBearing
DoChenRollingBearing's picture

I pay about 6% premium for Gold Eagles at my LCS.

 

"Three gets you five" you could take along a fistfull of Buffalos or Maples (both .9999) to India and get a lot more than 8% over spot...

Wed, 10/16/2013 - 17:31 | 4062426 Dear Infinity
Dear Infinity's picture

interesting, what are you paying for silver eagles if you don't mind me asking?

Wed, 10/16/2013 - 17:41 | 4062464 DoChenRollingBearing
DoChenRollingBearing's picture

I have not bought Silver Eagles in a while, so I do not know.  About $2.50 - $3.00 per oz is about right though.

Thu, 10/17/2013 - 10:55 | 4064966 Greenskeeper_Carl
Greenskeeper_Carl's picture

wow thats pretty good. I used to pay that from mine when it was 28-32 an oz, not so much anymore.

Wed, 10/16/2013 - 17:46 | 4062484 midtowng
midtowng's picture

Those foolish Indians. Don't they know that FRN's are the only true measure of value?

Wed, 10/16/2013 - 18:34 | 4062660 Running On Bing...
Running On Bingo Fuel's picture

Gotta admit that dude in the pic is waaay stylish.

I bet he could roam as a free range indian in any 'merican city and no one would have the foresight to 'capture' him and his treasures.

Over.

Wed, 10/16/2013 - 17:14 | 4062369 akak
akak's picture

 

wake me up at gold 5000 

Paper or physical? 

Thu, 10/17/2013 - 00:03 | 4063902 Godisanhftbot
Godisanhftbot's picture

 I think you typed an extra zero, braintrust.

Wed, 10/16/2013 - 17:07 | 4062343 SilverIsKing
SilverIsKing's picture

At some point, the physical supply will be drained.  Then the paper price won't matter.

Wed, 10/16/2013 - 18:11 | 4062581 Running On Bing...
Running On Bingo Fuel's picture

India is the canary in coal mine. Those fuckers are cheap and they feel their fiat is weak getting weaker.

One can only hope that hyperInflation hits them first because they largely do not trust paper.

Wed, 10/16/2013 - 17:12 | 4062353 knukles
knukles's picture

"pent-up demand following a good monsoon"?
WTF?
I could understand clean clothes, water and food, but gold?

That's like at the Volcano National Park in Hawaii, you can take a hike down near the shore to a petroglyph place. All cool, until they start telling you about the people did them.  (Supposedly)  Were living amongst the lava flows with no green shit to eat or clean water.  They make it like dying from no sustenance.

Uh huh....
And then they had the time and wherewithal to carve petroglyphs into the lava beds.

Look, they either had the time to do the shit because they had food and water of they didn't.  One or the other.
Another fucked up rationale.

OK, the 4th quarter is the traditional buying time.  I get it.
But because of monsoons?

I am smarter than Harry Reid, FFS.

Wed, 10/16/2013 - 17:42 | 4062468 constantine
constantine's picture

About 50% of India's population is still involved in agriculture.  The 'good monsoon' here is a reference to the fact that India has apparently enjoyed an unusually good harvest this year... so I suppose the implication is that they have a little extra dough in their pockets this year to buy one of their favorite items... gold (petroglyph carvings to some).

 

 

Wed, 10/16/2013 - 19:17 | 4062860 buyingsterling
buyingsterling's picture

If it was America they'd be burning the crops to insure price stability

Wed, 10/16/2013 - 18:44 | 4062716 Freddie
Freddie's picture

Damn that shirt looks good.  I could be a pimp with that.  The Tylers seem to be getting a lot of mileage from it too.  A bit like William Banzi's SWAT thug pepper spraying everyone.

Wed, 10/16/2013 - 17:05 | 4062332 davinci7_gis
davinci7_gis's picture

BIS will short the shit out of it come Friday!

Wed, 10/16/2013 - 17:38 | 4062455 oak
oak's picture

not bis, it will be china now on reverse thinking.

Wed, 10/16/2013 - 17:08 | 4062349 CPL
CPL's picture

India is willing to pay more for gold than the buyers in the UK?  Pimptacular, now people know where to get a better deal selling their gold in an area that doesn't seem to lack demand.  

Wed, 10/16/2013 - 17:17 | 4062374 achmachat
achmachat's picture

why do you think Indian customs catch people trying to enter the country with gold bisquits up their rectums on a daily basis?

get in line.

Wed, 10/16/2013 - 17:41 | 4062465 CPL
CPL's picture

Gold slacks with a heavy rope?

Wed, 10/16/2013 - 17:12 | 4062358 akak
akak's picture

I am waiting for the Geruda to be doing the saying that all this buying of the golden things is only the making of the sillies and the wastings of the monies by the stupids who are not doing the trusting of the government and the banks of too bigness in the failing who have always been making the cheating and the stealing of the peoples with the fake monies of their fiat currencies which are always making the depreciating but who are not going to be having the doing of the making of the same this time.

Wed, 10/16/2013 - 17:13 | 4062362 knukles
knukles's picture

Impressive, sir.

Wed, 10/16/2013 - 17:13 | 4062364 LeisureSmith
LeisureSmith's picture

More manipulation of the master mineral. 

Wed, 10/16/2013 - 17:16 | 4062372 ebworthen
ebworthen's picture

I thought barbarous relics didn't encounter demand shortages and high premiums?

Wed, 10/16/2013 - 17:20 | 4062384 The Econ Ideal
The Econ Ideal's picture

Physical 8% above spot isn't unusual: Typical dealer cash premium is 4-5% above spot (under 10 oz. for example), and with credit card purchase (which many apparently use for fastest delivery) add 3%. Premiums on silver are comparably astronomical (well over 10% above spot). 

Wed, 10/16/2013 - 17:22 | 4062391 Sufiy
Sufiy's picture

The Big Picture:


Jim Rickards – Why China is Buying Gold & Calling for a De-Amercanized World


  Jim Rickards steps in with his analysis of the recent China Call to De-Americanized World and its implications for the Gold market. China buys Gold by tons now on the dips and taking the physical delivery. http://sufiy.blogspot.co.uk/2013/10/jim-rickards-why-china-is-buying-gold.html#

Wed, 10/16/2013 - 17:55 | 4062523 Kirk2NCC1701
Kirk2NCC1701's picture

I value his opinion more than almost anyone on this site (other than TD).  He's so right in advising people to diversifying their liquid/investment portfolio 10-20% in PM (bullion).

10% for conservative investors, 20% for aggressive investors.  This acts as a hedge or "insurance", not as something that pays "dividends".  It's the rest of the portfolio (the 80-90% in paper assets) that is supposed to pay dividends.

Wed, 10/16/2013 - 19:48 | 4062932 RaceToTheBottom
RaceToTheBottom's picture

I think his views on SDR are spot on.

They are just trying to keep the dollar from crumbling long enough to roll into SDRs as the next Fiat based reserve currency....

Wed, 10/16/2013 - 17:36 | 4062421 Bay of Pigs
Bay of Pigs's picture

The anti gold and silver propaganda and popular fiat delusions are strong in the Western press.

Like today, Warren Buffett was on the BlowHorn [CNBC] talking about the USA's "237 year tradition of having the worlds reserve currency".

I shit you not. Nobody on that network even batted an eye to that bold face lie. 

Wed, 10/16/2013 - 17:45 | 4062473 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Bay, that is incredible!  Warren has lost it...

237 years of the world´s reserve currency...

Ha ha ha ha ha ha!

Wed, 10/16/2013 - 17:58 | 4062524 akak
akak's picture

Warren should know ... he was around at the time the US dollar was born.

Grimly holding on to (a parasitic) life is in the nature of being a vampire.

Wed, 10/16/2013 - 19:10 | 4062836 Bay of Pigs
Bay of Pigs's picture

I don't know why people would listen to Buffett on anything. He's a senile old prick who lies about everything these days.

Listen to him here gush over Jamie Dimon and rewrite history in regard to the Bear Stearns and WaMu takeovers.

http://video.cnbc.com/gallery/?play=1&video=3000208287

Wed, 10/16/2013 - 18:55 | 4062782 therover
therover's picture

BOP...I was watching when Buffet said that and yelled out loud  'What the fuck is he talking about ?!'

 

Wed, 10/16/2013 - 17:33 | 4062430 JPMorgan
JPMorgan's picture

In gold we trust.

Gold was traded for goods and services long before the US dollar and it will be around long after. 

Wed, 10/16/2013 - 17:40 | 4062462 Kirk2NCC1701
Kirk2NCC1701's picture

After being on ZH for almost 2 years and succumbing to the Tsunami wave of its culture, I have shepherded all of my shiny Precious out of the greedy clutches of the Vampire Squid and its Gov henchmen.  It's all gone from the USSA.

So, in the spirit of that Tsunami... Fukubernankesan and Fukubarrysan!

Wed, 10/16/2013 - 17:47 | 4062493 achmachat
achmachat's picture

did you convert to fiat and then re-convert to real shiny in the destination country, or did you manage to ship the shiny out to its new home?

inquiring minds want to know.

Wed, 10/16/2013 - 18:15 | 4062584 Kirk2NCC1701
Kirk2NCC1701's picture

Took delivery in destination country.  First from fiat to paper, then (much later) from paper to phyz.  Neither ever came into the US.  All legal, etc.

Wed, 10/16/2013 - 18:39 | 4062685 Running On Bing...
Running On Bingo Fuel's picture

Well played Captain. Live long and prosper.

There are Onethousand_and_ninetynine reasons to follow the good Captains blueprint.

Over.

Wed, 10/16/2013 - 19:41 | 4062922 RaceToTheBottom
RaceToTheBottom's picture

Congrates on the gold movements

Wed, 10/16/2013 - 18:01 | 4062545 DavidPierre
DavidPierre's picture

 

 

 

Hold on a second there...

 "Conspiracy theorists".  

They are all over the place. They are nuts. They are just a bunch of "disgruntled's" because they either didn't get their way or they are a bunch of idealists who think the world should fit their crazy theories.

But hold on there just a second, many of the past "theories" have already been proven as absolute fact.

In the words of Tyler Durden when describing the at market volume dumps in the Gold market had this to say: "The good news is that as everyone knows, aside from equity, electricity, FX, Libor, aluminum, and credit derivative markets (in just the case of JPM) gold is never manipulated:

Blythe Masters promised. So there's that"...

Many of these "theories" were not even "out there" or even close to off the wall, many were just of the plain Occam's razor common sense sort that were pretty obvious in retrospect. My point is that "conspiracies" do exist, many have been proven factual and few even take any stretch of the imagination to understand or beleive.

The above leads me to another area currently in the news, the debt ceiling. What in the world or how could anything to do with the debt ceiling have even a remote possibility of being "conspiratorial"? Someone mailed me a second hand word of a "friend" who supposedly has worked in Washington DC for some 40 years and says that the current circus saga over the debt ceiling was "planned". He said it was planned 6-8 months ago. Should we believe this?

Should we believe the second hand word of someone we don't even know? Who is this guy and how could he know this? Does he have an agenda or is he just messin' with us?

I must confess that subconsciously I thought the same thing but I didn't really know why. Just as with other "events" that I've watched with my own eyes that didn't make sense initially, then I figured out what was wrong eventually. I think I've figured this one out.

Please stay with me, this is so simple that it's stupid. We are now living through a "government shutdown" where parks and memorials are shut down across the country. This is kind of stupid because there really is no expense to keep a bike path, cemetery or open air memorial open. In fact it takes even more expense to kick people out (and to give them tickets as penalty for law breaking).

But this is what is happening and has been happening since day 1. So where is the "funny business"?

Signs! Where did all of the signs come from? The signs that say that the park is closed or the memorial or the walking trail (or "closing the ocean")... where did they come from? Who ordered them? How long ago were they ordered? Why were they ordered? Were signs ever erected in past government shutdowns? I'll bet that never in the past when we had one of these Congressional pushing matches that parks etc. were not closed. I don't know this for a fact but I don't ever remember it.

In any case, these signs (since they were ordered by Washington) were not ordered a day or 2 before the shutdown, Washington doesn't work like that. The graphics, wording, size and materials (not to mention the awarding of "non bid" contracts to printers) all had to be chosen ahead of time. The signs had to be fabricated and shipped all over the country to arrive "in time". Is this a big deal? Well, not really except for the fact that to me this whole government shutdown/debt ceiling debate seems "staged" or made for public consumption.

I smell a rat, what sort of rat I don't know...but, at least we know that Gold and Silver are still free and fair markets...?

I wrote the above late yesterday and since then have seen where the USDA has told states not to forward their Nov. issuance files and to delay transmission of "electronic benefit transfers" EBT (food stamps) ...until further notice.

I read this at Zerohedge and have not found it yet anywhere else.

If this turns out to be true and no debt deal is arrived at then I guess we will have the answer (the rat that I smell?) to another one of those crazy conspiracy theories. You know, those "crazies" who have said that the only reason that over 2 billion rounds of hollow point ammunition have been delivered to domestic government agencies...is to... use them. 50 million hungry, angry and eventually rioting people might be a reason? 

Silver will spend when nothing else will.

http://www.lemetropolecafe.com

 

Wed, 10/16/2013 - 19:01 | 4062801 SoilMyselfRotten
SoilMyselfRotten's picture

If they need 2 billion rounds they must be terrible shots. Either that or we'll be occupied by China in the near future.

Wed, 10/16/2013 - 19:18 | 4062865 RaceToTheBottom
RaceToTheBottom's picture

Gold marketplace is getting weirder and weirder every day.  It is getting close, yes?

Thu, 10/17/2013 - 00:04 | 4063903 Godisanhftbot
Godisanhftbot's picture

 Do goldbugs drool when they talk about it?

Thu, 10/17/2013 - 02:58 | 4064069 gyue
gyue's picture

physical gold and silver have been used as daily trading currency over a thousand year in these countries, they know what they are doing.

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