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India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High

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India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High

Demand for gold continues to be robust and has indeed increased significantly in recent weeks despite gold’s most recent paper driven gold weakness.

Demand in China and India surged again and gold reserve diversification by the central bank of Russia hit a new record high in September as geopolitical tensions rose. 

The seemingly insatiable appetite of the growing Indian middle class for gold is causing the government in India to again consider imposing sanctions on the importing of gold. 

Gold imports into India in September were worth $3.8 billion. This figure is almost double the $2 billion spent by Indians in August as, once again, the Indian middle class, like their Chinese counterparts, used the opportunity of a weakened gold price to increase their holdings. This was particularly the case in recent weeks and in the run up to the Diwali festival which began yesterday with Dhanteras. 

To put this figure in context it is worth noting that in August 2013 gold imports were valued at just $739 million.

Indian gold imports were up 449.7% y/y in September, which is approximately 94 tonnes, using the average gold price for September.

From the point of view of the government in India, this level of demand for the precious metal, which must be imported, is an unwelcome development. "The trade deficit worsened to an 18-month high of $14 billion in September following a 450% rise in gold imports as importers rushed to take advantage of lower prices" reports India's Economic Times.

The government in India claims that this staggering level of demand is causing a weakening of the rupee which undermines India's ability to import the other commodities upon which it depends. 

Exactly how the Indian government intend to deal with the problem is unclear. The previous attempt to control gold imports in 2013 was aborted due to it's deep unpopularity and to the fact that vast quantities continued to be smuggled into India regardless, resulting in loss of revenue to the state.
In China, gold imports have surged again. 

In the world’s largest gold buyer China, premiums recovered to $2-$3 an ounce from $1-$2 overnight, showing higher demand and lending support to global prices. Shanghai Gold Exchange (SGE) gold withdrawals were very high this week and saw a huge rise for the week to 68.4 tonnes with most of the buying after their Golden Week holiday.

Last year alone, China imported almost 2,000 tonnes of gold as seen in the important metric that is withdrawals from the SGE.  To put that figure in context, global mining supply will be around 2,700 tonnes this year.

What we in the West need to appreciate is that - in the case of both India and China, where around one third of the population of the Earth reside, - it is masses of individuals, families and local businesses who are driving this demand.

It is being driven particularly by the burgeoning middle classes who are accumulating whatever gold they can with their disposable income. The desire to own gold as savings and financial security is culturally embedded in these ancient cultures. 

Asians experience of fiat, paper currencies has not been a good one.

As such, the demand is not speculative and a cyclical, short term blip. Rather, it would appear to be a long term, structural shift to higher demand. While the trend may dissipate it is very unlikely to reverse into a trend of mass selling and it is unlikely to reverse trend anytime soon given the fiscal and monetary challenges facing the Western and indeed the Eastern world.
Apart from massive store of wealth demand in the East, the gold reserve demand by many large, creditor nation central banks continues unabated. 

In Russia, the central bank added a very large 37.3 tonnes of the metal to it's reserves in September - it's largest purchase in fifteen years. 

It is an indication of the strategic importance that Vladimir Putin and his government place on gold that such a large amount was purchased at this time of international tensions. 

The rouble has been under tremendous pressure due to Western imposed sanctions and the slump in oil prices - Russia's largest revenue source. According to the Russian Central Bank: "In the past ten days we have sold about $6 billion" to support the rouble rate, Reuters reported yesterday. And yet $1.5 billion was made available to acquire gold reserves. 

Asian people are acting like their own central bank and diversifying their wealth. 

It is safe to say that - in the event of a global monetary crisis brought on by a tsunami of insurmountable QE compounded debt - the average Indian or Chinese family will be reasonably well equipped to weather the financial and monetary storm. 

The same cannot be said, unfortunately, for their Western counterparts where ownership of tangible assets is abysmally low and only a tiny fraction of the population own gold and silver bullion.

Get Breaking News and Updates on the Gold Market Here 

GOLDCORE MARKET UPDATE
Today’s AM fix was USD 1,246.75, EUR 982.08 and GBP 777.66 per ounce.
Yesterday’s AM fix was USD  1,251.75, EUR 978.85 and GBP 774.17 per ounce.
    
Gold climbed $2.20 or 0.18% to $1,248.30 per ounce and silver rose $0.07 or 0.4% to $17.51 per ounce yesterday. 


Silver in U.S. Dollars - 10 Years (Thomson Reuters)

Gold in Swiss storage or for immediate delivery lost 0.2% to $1,246.08 an ounce by 1200 in Zurich.
Silver for immediate delivery lost 0.7% to $17.43 an ounce. Platinum fell 0.5% to $1,276 an ounce. Palladium was 0.4% lower at $776 an ounce.

Gold retreated from the highest in almost six weeks in dollar terms due to profit taking and renewed risk appetite which saw stocks globally bounce from their recent lows although european shares are showing weakness again this morning. Although gold continues to eke out small gains in euro, pound and other fiat currency terms.

Gold reached $1,255.34 an ounce yesterday, the highest since September 10. Demand in India, the second biggest gold buyer, surged before the Diwali festival, Indian’s Christmas.

Diwali, the festival of lights is celebrated tomorrow and Dhanteras, the biggest gold buying festival, was celebrated yesterday. Dhanteras is considered an auspicious time to buy gold coins, bars and jewellery. Researcher CPM Group estimates the holiday generates about 20% of India’s annual purchases.


Platinum in U.S. Dollars - 10 Years (Thomson Reuters)

Gold has risen 3.2% so far in October as stocks fell sharply and traders pushed back estimates for when the Federal Reserve might raise U.S. interest rates from near 0%. The IMF has cut its economic growth outlook this month and Fed policy makers said slowing foreign economies were a risk to U.S. expansion. Indeed, the U.S. economy itself looks very vulnerable to a recession. 

The Shanghai Gold Exchange is working to implement China's first forwards and options in gold, in a race to put China as the main Asian pricing benchmark that could rival the London gold fix. 

The European Central Bank is planning to buy corporate bonds on the secondary market and may decide as soon as December with a view to begin purchases in early 2015. This is another sign of desperation on the part of central bankers who are attempting to kick start the structurally broken Eurozone economy.

A diversified portfolio of precious metal coins and bars, owned in a segregated and allocated manner in the safest jurisdictions in the world remains very prudent.

See Essential Guide to Storing Gold In Switzerland here.

 

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Wed, 10/22/2014 - 20:04 | 5365638 John Wilmot
John Wilmot's picture

"The government in India claims that this staggering level of demand is causing a weakening of the rupee which undermines India's ability to import the other commodities upon which it depends."

Horsehit. The cause is the Indian government printing money. The part that gets spent domestically pushes up domestic prices, while the part that gets spent on imports pushes down the exchange value of the rupee. The Indian government is (surprise surprise) lying to cover its tracks, blaming hoarders or speculators or whatever other imaginary hobgoblin for the problem it has itself knowingly created.

"Exactly how the Indian government intend to deal with the problem is unclear."

Stop printing money you miserable fucks. But they won't do that - they'll just enact new price controls or other futile measures to mask the consequences of their looting. Every rupee they print prices another untouchable out of the rice market. They are murderers.

Thu, 10/23/2014 - 04:44 | 5366574 DarkLordofSadNews
DarkLordofSadNews's picture

you are partially correct I remeber indian land pricing booming  from rs 3000/40.4 sqm  (called 'cent') to 100,000 ...

 Where as wages stagnate and only game in town is property (not industry and IT which are majority foreign owned 

Wed, 10/22/2014 - 19:30 | 5365526 Hongcha
Hongcha's picture

The number and the line that matters is; all-in cost of extraction.  It cannot go below or rather, be held long under that number without turning the market into an utmost abortion and forcing legit players to seek other markets.  Amerika shoots itself in the foot again and my disgust with the current Admin rises.

Thu, 10/23/2014 - 08:21 | 5366771 Bohm Squad
Bohm Squad's picture

If it were a consumable, then newly extracted gold would play an important role.  Gold most certainly can be driven below its cost to extract.  At that point, miners would either close up shop, lock in existing prices via contracts, or take on debt and hold onto inventory.  Point is, I wouldn't get hung up on extraction costs.

In the long run, you're right...but not in the short run.  How short is a short run?  Hellifiknow.

BTW, Silver is a consumable.

Wed, 10/22/2014 - 20:14 | 5365682 FieldingMellish
FieldingMellish's picture

Nope. It can continue well under that number. The miners will simply hedge and that will force the price even lower. There really is no end in sight while there is a paper market.

Wed, 10/22/2014 - 19:28 | 5365513 bigusdickus
bigusdickus's picture

ISIS must be manipulating gold and silver  cause they got crushed today...

Wed, 10/22/2014 - 19:28 | 5365511 bigusdickus
bigusdickus's picture

I just knew the pumpers would show up today..

terrorism act in Ottawa and gold drops 10 bucks...

 

You've lost the argument and people know you are charletans

 

move on

Wed, 10/22/2014 - 20:22 | 5365714 Pickleton
Pickleton's picture

As for me, I'd receommend you stay away from the word "pumpers" with a name like bigus dickus. Yikes.

 

Have you ever tried to hide your penis pump by claiming it's a bong?

Thu, 10/23/2014 - 08:22 | 5366765 bigusdickus
bigusdickus's picture

you show your age kid

look up the name on your favorite search engine since you don't have an independant brain to consider that there may be a purpose to the name...

 

I'll even help you

http://www.youtube.com/watch?v=zPGb4STRfKw

 

 

Wed, 10/22/2014 - 19:11 | 5365452 FieldingMellish
FieldingMellish's picture

Now that Diwali has started, Indian gold demand will drop like a stone... as will the price of gold... see y'all at $1050. USD index on breakout move to 92.

Wed, 10/22/2014 - 18:37 | 5365339 Ewtman
Ewtman's picture

Maybe Indian demand is surging, but the price of gold is still on the decline and will be for a while as this analysis clearly shows...

http://www.globaldeflationnews.com/gold-elliott-wave-update-for-october-...

Wed, 10/22/2014 - 19:24 | 5365493 SAT 800
SAT 800's picture

There are no Elliot Waves; this is well understood by some professors of Statistics who studied the subject. It's projection; a human belief system. It's worthless.

Wed, 10/22/2014 - 20:14 | 5365685 FieldingMellish
FieldingMellish's picture

He seems content in his ignorance. Let him be.

Thu, 10/23/2014 - 07:32 | 5365068 TheGreatRecovery
TheGreatRecovery's picture

   :^)

Wed, 10/22/2014 - 17:05 | 5364963 Razor_Edge
Razor_Edge's picture

The price has crashed because of manipulation in the comex market to try and prop the paper imposter up, another fractional scam. If it ain't precious and in your hands, it ain't real. I'm stacking my stash, and I'm getting paid while doing it. Anyone interested in doing the same, email me at auroraassociatesdublin@gmail.com for the how to. Please put zerohedge in the subject line.

Wed, 10/22/2014 - 15:54 | 5364715 messystateofaffairs
messystateofaffairs's picture

Why are Indians treating the Rupee like poopee?

Thu, 10/23/2014 - 07:50 | 5366700 TheGreatRecovery
TheGreatRecovery's picture

Because they're not stoopee?  :-)

Wed, 10/22/2014 - 16:22 | 5364814 tbd108
tbd108's picture

Indians have 5,000+ years experience with paper money dirtbags. The Western bankers did not invent thievery and usurious slavery. To be fair, modern electronics makes them more dangerous than their predecessors but they are still of the same ilk. The Chinese people have a similiar experience and they are the other big gold buyers. This is not a coincidence.

Wed, 10/22/2014 - 15:40 | 5364681 topshelfstuff
topshelfstuff's picture

It was over a year ago when whoever calls the shots in India re: Gold began acting like they got Puppetized, Bought, Blackmailed, something that made them act strongly anti-Gold, and big-time just like our CB's. Aside from all the added taxes, one after another, restrictions, etc., they also began accounting for gold like a consumable, like Food, Oil, making gold a minus instead of a Plus. It was also noticed by Sprott. I just found that out by a search to see if I could find some support, though I know you all must  have noticed. I found this:

Like Eric Sprott said, why does India consider gold a consumable in .


http://blogs.reuters.com/india/2013/...it-a-timeline/

Time line article above of India's gold repression fits exactly with Gold market crush of 2013. Had to be central bank orchestrated. Like Eric Sprott said, why does India consider gold a consumable in their current account calculation?. Sure the oil imports were affecting C/A but for the most part gold adds to the national wealth and is not used up. It is considered wealth in India and not a consumable. I would think any country/bank would consider gold, diamonds, masters paintings, gems etc. an asset that would enhance the value of your currency and not dilute it by stating the purchase of precious investments negatively affects the C/A. The Indian banks used to lend with gold as collateral.

 

 

 

Wed, 10/22/2014 - 16:26 | 5364827 tbd108
tbd108's picture

The Reserve Bank of India is a branch location of the Bank of England (Rothchild). When India got its independence in the 1940's they did not get independence from the English/American banksters.

Wed, 10/22/2014 - 13:49 | 5364261 devo
devo's picture

Nobody wants gold. They want stocks, bitcoins, and paper.

Wed, 10/22/2014 - 14:20 | 5364359 angel_of_joy
angel_of_joy's picture

Sarcasm ?

Wed, 10/22/2014 - 16:01 | 5364739 Pickleton
Pickleton's picture

How many stories have we read on ZH that says there are no real buyers of stawks any more?  It's buybacks, printing, HFT, etc.

He said everyone wants stawks, so I'm gonna go with clueless or downright stupid.

 

 

 

Wed, 10/22/2014 - 13:39 | 5364198 jm
jm's picture

Russia can't auction their debt, the ruble is in free-fall, the oligarchs' oil proceeds are in disater mode... and then you tell me BoRUS is buying gold.

I believe, sir, your story is full of crap. 

Wed, 10/22/2014 - 16:49 | 5364850 tbd108
tbd108's picture

Dear Clueless One,

If you want to know how the Russians will/are handling the Western Banksters attacks, read up on the Battle of Stalingrad. Also instructive is how the Russian people dealt with the Napoleonic invasion. You seem to think they will surrender to the bankster scum because the price of vegetables has gone up. You are not only wrong, but also a clueless jackass.

Wed, 10/22/2014 - 18:01 | 5365177 TheGreatRecovery
TheGreatRecovery's picture

Russians are good farmers.  They can grow plenty of vegetables.

Wed, 10/22/2014 - 11:52 | 5363677 kumquatsunite
kumquatsunite's picture

Shills! Put the gold in the ground, take the gold out of the ground...The difference between third worlders and the western countries is enormous. The third worlders would have to thousandfold their "gold" in order to live at western world standards. Which would you rather have?

Thu, 10/23/2014 - 07:47 | 5366697 TheGreatRecovery
TheGreatRecovery's picture

I love kumquats, but you can't save them for emergencies.  You can save silver.  Of course, you can make kumquat preserve and save it for emergencies, but it takes up a lot of room, and fresh kumquats are much more fun to eat.

Wed, 10/22/2014 - 16:15 | 5364794 Dame Ednas Possum
Dame Ednas Possum's picture

Your use of the term "third worlders" shows you to be an obnoxious, pompous twat.

Thu, 10/23/2014 - 07:49 | 5366698 TheGreatRecovery
TheGreatRecovery's picture

And "twit", as in Monty Pytho's "upper class twits"?

Wed, 10/22/2014 - 12:41 | 5363905 MeelionDollerBogus
MeelionDollerBogus's picture

honest work, real assets, that's what.

Wed, 10/22/2014 - 13:27 | 5364146 tocointhephrase
tocointhephrase's picture

What ever happened to MDB?

Wed, 10/22/2014 - 14:53 | 5364518 MeelionDollerBogus
MeelionDollerBogus's picture

va-poo-rized apparently. No WONDER the treasury market's in trouble! He was supposed to buy them all!

Wed, 10/22/2014 - 12:35 | 5363887 sun tzu
sun tzu's picture

Western Standards = Facebook, Twitter, and $17 trillion of debt

Wed, 10/22/2014 - 13:25 | 5364141 tocointhephrase
tocointhephrase's picture

Plus iCrap

Wed, 10/22/2014 - 19:18 | 5365478 Ban KKiller
Ban KKiller's picture

Eating fast crap food.

Wed, 10/22/2014 - 11:11 | 5363457 lasvegaspersona
lasvegaspersona's picture

As the head of the Indian Central Bank has pointed out..if Indians were buyinh GLD the country would get credit for foreign investment. Because it is metal they are damned for 'consuming' gold....stupid eh?

Wed, 10/22/2014 - 11:18 | 5363489 Latitude25
Latitude25's picture

Here's what all gold investors (paper and physical) should know about the love of gold in India.  Paper will never be a substitute.

https://www.youtube.com/watch?v=sUr2E4dfs0Y

Wed, 10/22/2014 - 11:10 | 5363438 Latitude25
Latitude25's picture

And the physical silver market?

Ag annual mine production is around 25k tons but yes there has been a supply deficit over the past ten years according to the silver institute.

https://www.silverinstitute.org/site/supply-demand/

Question is:  Where has the physical Ag come from to meet that deficit all those years?  China?  Where else?  How will it be met in the future?  Economic collapse means much lower industrial demand so a supply surplus?  Important questions for physical silver investors and I am one of them

Wed, 10/22/2014 - 19:08 | 5365456 SAT 800
SAT 800's picture

It's not an important question; you're mis-informed. The silver market is sort of an auxiliary gold market. it has nothing to do with supply and demand. it's driven by fear. It's real money and most of the world population knows this. If everything is going to be fine forever, the price will go down. if people have serious concerns about the future of their currencies and thier financial systems; the price will go up. It's not a commodity; it's function is to be hoarded; ( to a first order approximation), all the conversation about it's used in electronics, it's not used in electronics, etc, is just noise. Obviously the defecit came from above ground storage; vaults. I studied this a long time ago which is why I put all my life savings for my grandchildren in Silver "too early"; ie; before the final bottom, at about $6.87, taking into account storage charges since then, etc. The silver and gold price measure the value of the currency, and the faith in the currency and in the financial system, not the other way around. Don't ever read anything about supply for silver all you're going to do is confuse yourself. The dollar has been going down since 1913; it's not going to stop; it's not going to increase in value. Silver is a five year plus savings account; you'll get your purchasing power back; if you have any market timing sense, there will be times when you can get a lot more than your purchasing power back. But it's not going significantly backwards at this stage of the game; because that would be indicating that the dollar was "fixed up"; the dollar isn't fixed up and neither are any of the other currencies.

Wed, 10/22/2014 - 14:06 | 5364300 pitz
pitz's picture

Most silver is produced as a co-product/by-product of base metals mining, particularly copper and zinc.  As the economy turns down, it will become uneconomic to operate the copper mines, hence, supply from those sources will be severely restricted.  Meanwhile, presumably in an economic downturn, there will be demand for 'safe' forms of money that cannot be subjected to the inevitability of debasement by central banking authorities desperate to jump-start the economy. 

Hence, I wouldn't worry too much about the 'industrial demand' side of things too much.  That's not to say that silver can't go down even further, but there's a lot of supply that simply will end up dissappearing in a weaker economy. 

Wed, 10/22/2014 - 14:33 | 5364429 Latitude25
Latitude25's picture

And how quickly will copper production slow down after a market crash?  I would guess that a crash would cause an immediate drop in price but not an immediate slow down in production thereby generating a surplus of copper and silver leading to a temporary glut of both.

Wed, 10/22/2014 - 19:11 | 5365463 SAT 800
SAT 800's picture

LOOK the price of silver and gold is not supply driven. It just isn't. They're not a commodity. they're money. they're bid for and bought because of people having serious concerns over the future of their currencies and their financial systems; you better get this straight or you're going to deceive yourself.

Thu, 10/23/2014 - 00:30 | 5366373 Arius
Arius's picture

how can it be money if i cant pay anything with it?  can you pay your mortgage or bus fare for that matter?  of course not, then what money are you talking about?

 

read armstrong and you will understand a thing or two about money ...

Thu, 10/23/2014 - 07:49 | 5366699 new game
new game's picture

TRUE DUE THE REALITY IN THE STREETS. i tried, nobody wants your fucking pm's except other like  minded pm ers. good luck finding that person when your car breaks down and you offer 10 oz's of silv for a repair. BUT, WHEN THE SHTF then this backup plan will be as good as gold, maybe? you assume that the rule of law will exist,ha-NOT.

question should be: when the fuck is that gonna happen and do i have enuf to be the next king? but, you will be running the risk of disclosing your wealth to an angry crowd seeking what you have. hmmmm, not entirely sure about that. thinking, food water, beanS, bullets and a bunch of alternative well thought out PLAN(S) rather than pm's distorting the plan of immediate survival. FSA will be roving the landscape pillaging out of desparation, not to mention our gov. seeking everybody as a potential terror suspect... grim at best, morph into your wolf personna and survive with like minded wolves in packs...

Hollywood, another end of the world movie (plez), ha...

Wed, 10/22/2014 - 22:23 | 5365940 Latitude25
Latitude25's picture

Silver can be very supply driven and gold very little.  It's all about stock to flow.  I believe you're missing something that many of the PM believers do also.  Why is silver more volatile than gold then?  

Wed, 10/22/2014 - 20:32 | 5365748 MalteseFalcon
MalteseFalcon's picture

Third worlders buy PMs because of tradition.  They do it as a matter of course and it indicates nothing.  First worlders buy it "because of ... having serious concerns over the future of their currencies and their financial systems".  Until first worlders buy, it ain't happening.

Wed, 10/22/2014 - 11:55 | 5363691 kumquatsunite
kumquatsunite's picture

Ya know its odd because anything that nees the shills screaming that what they own is valuable, isn't very valuable...The more they yell how valuable the stuped metals are, the more you know they are just shilling for themselves.

Wed, 10/22/2014 - 15:48 | 5364709 Pickleton
Pickleton's picture

the stuped metals are

 

Ahh, the authority on stupid.

Wed, 10/22/2014 - 17:49 | 5365128 therover
therover's picture

Come on Pickelton...don't you know stuped metals are the ones wrapped in cloth and dipped in hot water, hence having bigger premiums.

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