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Gold Jumps After India Reveals Import Surge
Gold prices jumped overnight on initial rumors and again in the last hour as Indian officials note that March Gold imports surged to 125 tons (more than double last March's 60 tons). As Reuters reports, Gold imports in the fiscal year 2014/15 ended March 31 jumped to 900 tonnes, up 36% from a year ago.
Gold prices jumped as the news broke overnight... (and BBG headlines hit this morning)
BullionStar's Koos Jansen had recently noted the lifting of 'capital controls' on Gold and despite the increasing efforts of the government to enable 'monetization' of gold...
Because of a “current account deficit” the Indian government decided in March 2012 to raise to import duty on gold from 2 % to 4 %, in June 2013 from 4 % to 8% and in August 2013 from 8 % to 10 %. Additionally, in August 2013 the 80/20 rule was implemented, which was eventually withdrawn in December 2014.
The restrictions the Indian Government implemented on gold trade spawned new life to smuggling cartels with all due consequences. Official Import fell drastically, wiping out any revenues the government collected from the import of the yellow metal. In May 2013 Indian gross gold import accounted for 168 tonnes, by September 2013 a multi year low was reached at 15 tonnes. Premiums in India, over London spot prices, skyrocketed to a staggering 25 %.
For a close look at recent import data let’s start with January; India officially gross imported a meager 39 tonnes, though up 9 % year on year. In February gross import accounted for 50 tonnes, up 57 % y/y. Then, the real surprise came this month; as said previously preliminary data (derived from daily numbers at Infodrive) suggests gross import accounts for 130 tonnes (March 2 – 21). When India’s Directorate General of Commercial Intelligence & Statistics will publish official data somewhere around April 13, we know the exact imported tonnage for March.
Perhaps surging import is caused by a falling price since the beginning of the year combined with the relaxation of import restrictions. Remarkably, premiums are staying close to 12 % (including the 10 % import duty), sourcing the metal is no problem.
From daily trade data we can see a lot of gold from Ghana going directly to India. Could it be there is some conflict gold coming from Ghana?
Monetizing Gold
A new scheme the India government is looking at to obstruct gold import is through monetizing gold, comparable to the Turkish system (read this post for the Turkish Reserve Option Mechanism). The World Gold Council’s managing director in India, Somasundaram PR, stated:
Will they allow banks to hold a part of their reserves in gold because of this deposit monetization? It is one of the recommendations. You need to give huge incentives to the banks to operate this deposit monetization.
In short, the Indian people would be able to make a gold deposit at a commercial bank, which technically is always a loan to the bank. Subsequently this bank can use the gold to meet its reserve requirements at the central bank – in this case the Reserve Bank Of India (RBI). The deposits would accrue interest (in Turkey denominated in gold), however, like every bank deposit, the gold can vanish if the bank becomes insolvent. The universal rule is; no risk, no return.
Furthermore, if the gold deposit scheme will be implemented, to the likes of the World Gold Council, I wonder how the RBI will treat the gold held as reserve requirement. The Turkish central bank (CBRT) counts these reserves as official gold reserves, which is double counting.
Increases in Turkish official gold reserves are not caused by CBRT purchases on the open market, but a reflection of the amount of gold held as reserve requirement by banks at the CBRT.
The World Gold Council has released two reports on gold monetization, (i) Why India Needs A Gold Policy, (ii) Turkey: gold in action. Both reports combined count nearly 90 pages, but not once are the risks of lending gold to a bank disclosed. Whereas most people own gold to explicitly avoid these banking risks.
Another plan from the Indian Government to prevent the circulation of “black money” is to require people doing gold purchases above 100,000 rupees, to show a so-called permanent account number (PAN), which is used to prevent tax evasion. This would be disastrous for the Indian jewelry industry as 80 % of the industry’s business comes from rural customers, who don’t have a PAN. Hence, Indian jewelers have threatened to go on strike against this plan.
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For now, the demand is clearly there... despite it being a barbarous relic of only traditional value...
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Gold, bitchez. (for old time's sake)
Chuck Munger is NOT amused!
Fucking Munger and the rest of his ilk have neat piles of shiny all their own. They just won't admit it. I wonder if his is sewn into a coat lining...
Oh.....you know they do...
Is that for "Old times sake" Or, "For Gold times sake"?
This is the real gold story out of India today.
Tylers, I think it needs to be read on the general thread.
Modi is proving to be a total NWO operative. Encouraging GM foods, Get the gold out of temples and people's hands, shit-tons of empty rhetoric, nuzzling up to Israel and USSA....and Japan....
http://news.yahoo.com/indias-rich-temples-may-open-gold-vaults-pm-211841...
Fucking with Indians most sacred traditions...he might want to up his security just a little.
It's "tradition" : -)
what does demand have to do with the price?
And Silver stands idlly by.
why "for old time's sake"? I think I wrote it here two months ago or so that imho it's really a good time to buy gold
it's an excellent hedge against endless possible future scenarios. what I would never advise is to go all in. or on margin. or while you still have pressing debt
I would also never advise to buy too much of it at the same time, or in "paper form", or be conspicuos while doing it. or to expect that it has some magical properties
gold is the "oldest Ponzi". it has no value except in one: it is regarded as valuable since thousands of years. so it's reasonable that this will continue to be so for further millennia
and Indians know that, as well as Chinese, EuroAsians, Africans, Latin Americans and Europeans (or US Pilots with their belts full of gold coins, in case they get shot down)
the only population on Earth that is sometimes a bit confused about gold is the one that experienced a Prohibition of the Barbarous Relic from 1934 to 1974
Muslims know it too. No wonder they are constantly persecuted
https://youtu.be/ZVa7fBOvLxM
@ Ghordius:
We have been told repeatedly that 'Gold is a barbarous relic' - by bought and paid-for liars, cheats, and thieves. Why would any rational thinking person believe these assholes?
If Gold had no value, why would banks waste 'valuable' paper resources paying for: vault construction, elaborate security systems, and armed guards to protect it?
Remember "Rock, Paper, Scissors" from when you were a kid? Supposedly, Paper beats Rock, but I have yet to find any historical evidence to suggest even ONE time, where Paper beat a Gold Rock. Paper currencies come and go. Gold lasts forever. That may have something to do with why people all over the place put a value on it.
my point is an old one, and was ridiculed a short while ago on ZH (can't find the article, though)
the market relevant fact is not if gold has an intrinsic value. it's if people are used to regard it as valuable. and since how long
in fact, a monetary metal's fate is in danger of people finding a pressing industrial use for it. this diminuishes it's stock, and makes it's monetary value... decrease
FOFOA has a few lines (actually a lot of them) that explain that, btw. because of the huge stocks, gold could, potentially, stem the whole monetary world on it's shoulders
While your comments are well-taken, I think you've missed something fundamental. Gold is useful. It's use is as money. It's the best form of money we've found. Money allows humanity to do all sorts of productive activities that couldn't occur without money. Therefore, while yes it's true that gold is inert and sits there as a lump, that is actually a property that improves its usefulness as money. So it's not that it's "regarded" as valuable in some subjective or abstract way, it's that it is recognized as having a usefulness and that is what gives it its intrinsic value.
The ladies still like gold and often become very friendly with you when you give them baubles, necklaces, rings, and earrings made of gold. Until that changes, gold has value. Yeah, baby.
https://youtu.be/ZVa7fBOvLxM
...and so the clamp down shall resume...again.
More demand means that the price will go down right?
It will if we throw enough QE cash at it.
Wealth leaves weakest hands, which is why most buying to much PM's get squeezed when they face a cash shortage. That is the power of the banking system. They can outlast most of us. And when all of us have been squeezed out of out long PM positions, they step in and buy at the lowest prices. To bad most on ZH haven't figured that out yet.
Yeahhh that's how it works in this fucked up world.
Yawn. Paper gold jumped back to where it was yesterday
Gold jumping is north of 1300.00
It 'jumped' from 1195 to 1205. This is HUGE!
And don't forget. .. it's a store of value.
/ Heavy Sarc
Gold is up 3500% since 1971, more than the returns of the US stock market including dividends, compounded. Gold's track record is still better even after adjusting for inflation. And keep in mind that those buying physical gold are not even using any leverage. Gold has gone from $35 per coin to $1900 per coin in about 40 years. How is your portfolio doing in comparison?
>> $1900 per coin
If you're paying $1900 per coin someone is sticking it in your ass.
.
Gold will have a lid on it until shit fallls apart. If you don't have it before then it will be too late. Ubtil that time these price moves are meaningless.
That's why I just throw it in the damn sock drawer....and forget about it.
When the time is right.....you'll know.
Agreed, though it's interesting to consider what the price would be without the USD strength, considering the DXY is about 25% higher than the long-term average. Just plain scaling the current price to the average DXY puts us at 1500, and that's with all the manipulation taking place.
It's equally interesting to me it seems to be managed so close to 1200, regardless of what's going on in the currency exchanges.
a short while ago foreign central banks worldwide had their lowest historic level of USD FX reserves and the dollar was weak
now the global reserve currency has regained 20% of it's "market share of foreign CB accounts", and the dollar is super-duper strong
the question of the value of gold... in dollars has a lot to do with what foreigners hold. what they... prefer
Yeah but when you're looking at the DXY you have to factor in the worldwide competitive devaluation of currency. While the DXY may be up 25% against other currencies, what has the actual purchasing power of the USD done? Where I am a damn Pizza costs $20 and a 6-pack of decent beer costs $15. In other words, while the DXY is up, the USD is still down in terms of real purchasing power.
Hi Doc,
I think the thesis that all CBs including China's are in on the cap until the global rebalancing is complete and China has the requisite gold reserves to throw it's coming out party has a lot of truth in it.
This coordination just makes a lot of sense from a macro planning perspective if one endeavors to create a one world collectivist (everyone the same) paradigm which is all you hear about from the globalists.
After that rebalancing has occurred, it's less obvious how the sequence plays out.
Funny how virtually every uneducated Indian peasant (not their fault) knows the value and wisdom of accumulating Gold.
Yet virtually every educated western investor believes it's good for nothing.
Sort of reminds me of the tortoise and the hare.
define a bit more narrowly that "western". do you mean the French government shortly before Nixon's Shock or today's German government?
remind me more of Weimar.
a simple case of less gold then what creditors wanted, at the end. and a reminder that wars are way more expensive then what politicians promise they will be
No shit. So, same as it ever was then?
It's also funny how much effort some governments exert to suppress the free movement of a barbarous relic. I don't see anyone needing a special permit to buy a large quantity of steel, or wheat, or any other commodity.
Since when did Supply and Demand have anything to do with the price of Gold??
This is a new development.
Thats how you can recognize a fake manipulated paper market. Prices do NOT rise or fall on supply & demand, but on the NEWS of supply & demand
Dr Engali
I think you're half right, half wrong.
If/when the shit hits the fan they'll take Gold down. This is a strategy by the central banks to warn off 'fear' as in 'look at Gold, down $200, there's little fear in the system etc'.
In reality, this is what we want, smash Gold and then we can scoop up as much as out bank balances allow.
The problem is when they smash it down, and they will, there won't be any available at the paper price.
When they are done looting the vaults of other people's property to deliver to China, it will be obvious. I don't care what the bankers say. There is no way in Hell they have what they claim in their vaults. I have never once seen a gold bar on JPM's balance sheet. Yet they seem to have an endless supply of them.
There''s tons of gold available. About 85% of all the gold mined is still out there being recycled. And more is being mined.
It's no wonder we keep getting these artices about which nation bought this amount of gold. Shit, this is beginning to remind me of peak oil.
http://www.mygoldadvisor.com/which-is-more-scarce-gold-or-silver/
This comment is without merit unless done in a vacuum. Gold is sold globally, and has different reflected "real" value beyond the paper speculative price represented in different currencies. If the COMEX per your example pushed the paper gold price down to $200 all listed (alleged) inventory would be swooped up in less than 30 seconds through arbitrage trading ending the paper manipulative mechanism for good.
This will likely happen in reality when the SGE finally opens for business at today's listed price. The actual inventory listed is less than 2 days of regular Chinese accumulation. The manipulation game is on death watch. You can put it in the refrigerator. The champagne is chilling, the eggs are cooling, the butter's getting hard and the jello is jigglin'!
You are fooling yourself if you think the price is only manipulated in one direction. Since when do greedy bankers only want HALF the potential profits? The price is manipulated in both directions, if it's manipulated at all. I've worked at the COMEX, and I'm confident the SGE is not going to end the COMEX anytime soon.
"If it's manipulated at all".???
Talk about trashing your own argument just in one silly phrase! There's more than mountains of evidence about gold's manipulation, and in fact it has been recently verified http://www.zerohedge.com/news/2014-11-09/another-conspiracy-theory-bites-dust-ubs-settles-over-gold-rigging-many-more-banks-f and admitted too. When you go to buy ice cream, do you actually get the ice cream or just a paper voucher that says you had ice cream? Nuff said.
Gave you a greenie for the Chick Hearn reference. Chickie was the best!
He's the only autograph I ever got/wanted. Went to a game with my wife back in the forum days, and he was doing his pre-game radio coverage. On a break he invited me into the little booth and was as kind as can be, including signing the Laker pullover I was wearing. Nobody, and I mean nobody- could make a basketball game come to life over the radio like Chick Hearn. If it wasn't for Chick, the term "slam dunk" wouldn't exist.
Or the headline could have read, "Gold Jumps!! (back to where it was on Wedsnday afternoon)"
YAWN
Happens every other day with the DOW....but I don't see anyone bitching about that.
Unlike the DOW.....it's been happening for thousands of years with gold.
Which is what makes gold.......as good as gold.
This is how you know the price in nonsense. Traders reacting to something that happened a month ago...in another country. Imagine that on a larger scale and you realize how the price of gold got so low on tardthink that the West was stripped of it and all the miners went BK. And yet, Wall Street considers to insist it can deliver on hundreds of tons worth of contracts per hour.
Gold is rallying hard in Euros, having now retraced 50% of the drop from a few years ago. The US dollar equivalent price would be over $1500/oz
http://www.goldsqueeze.com/analysis
Maplehood Gold is rallying hard in Euros, having now retraced 50% of the drop from a few years ago. The US dollar equivalent price would be over $1500/oz
http://www.goldsqueeze.com/analysis
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Then those people following goldsqueeze.com are getting ripped off. I can buy 1 oz gold for under $1300 easily
And You are that flush with Ca$h? US$ are harder to aquire.
If you don't hold it.........
Gold may be a "Barbarous Relic", but it is prized by almost every Barbara on the planet.
And by other women too.
so India buying 60-70 tons a month, they should have bought about 8400 tons in last 10 years [70tons x 12months/year x 10 years]. That is more gold than fort knox has?? Really??
Indian temples consider giving up their gold.
http://in.reuters.com/article/2015/04/10/india-gold-temples-idINKBN0N02B...
how barbarous