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Is This The Start Of India's Gold Confiscation

Tyler Durden's picture




 

On April 5, 1933, FDR signed Executive order 6102 which made illegal "the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States" in the process criminalizing the possession of monetary gold by any individual or corporation.

This was de facto gold confiscation; De jure it wasn't, because as compensation for the relinquished gold, Americans would receive 20.67 in freshly printed US dollars for every troy ounce. Anybody who objected faced a fine of $10,000 (just under $200,000 in inflation-adjusted dollars) and up to 10 years in prison.

Once the government was confident it has confiscated enough gold, it turned around and raised the official price of a gold ounce to $35 (about $600 in today's dollars) devaluing the US Dollar by 40% overnight at a time when currencies were still backed by hard assets.

Fast forward 82 years to a time when the barbarous relic continues to be seen as the safest store of value among India's vast population (roughly 20% of the world's total), not to mention the main source of financial headaches for local authorities, one of the biggest importers of gold due to its "traditional" values and where relentless Indian demand for offshore purchases of the shiny yellow metal so plagues the government's current account and capital flow strategy, that the government may be preparing to pull a page right out of the FDR playbook.

Yesterday, Prime Minister Narendra Modi’s cabinet implemented the selling of "gold-backed bonds" when it approved the gold monetization plan and sale of sovereign bonds proposed several months ago by the Reserve Bank of India, the government said in a statement. The plans were first announced by Finance Minister Arun Jaitley in February as measures to woo Indians away from physical gold. As Jaitley explained yesterday, the deposited gold would be auctioned, used to replenish the Reserve Bank of India's reserves or be lent to jewelers. Subsequently, gold "depositors" can redeem in gold or cash depending on the tenure. Said otherwise, an attempt to "fractionally-reserve" gold, which would then be used a source of gold rehypothecation in the country that despite all the government's efforts, remains starved for physical gold.

What does the proposal entail?

As Bloomberg summarizes, an estimated 20,000 metric tons or more of bullion - more than double holdings in the U.S. - is stashed in India’s homes and temples, according to the government. It is this gold that India is scrambling to move from private hands to the public ledger.

As covered here extensively in the past, India is desperately looking for a long-term solution to curb gold imports after the current-account deficit widened to a record $190 billion in 2013 and the rupee slumped to an all-time low.

As the chart below shows, after declining to a 5 year low in 2014 following the implementation of numerous gold capital controls such as hiking the duty on imports to a record high 10%, which however also led to a record surge in gold smuggling, gold imports soared in 2015, and this year may be the highest in gold imports on record, surpassing 1000 tons.

Which is why a closer look at what the gold monetization scheme reveals Executive Order 6102 overtones: the plan will allow Indians to deposit their jewelry or bars with banks and earn interest, while the banks will be free to sell the gold to jewelers, thereby boosting supply. The deposits can be for a period of one year to 15 years with the interest on short-term commitments to be decided by the banks and those on long-term deposits by the government in consultation with the central bank.

The sovereign gold bonds are aimed at people buying the precious metal as an investment. The securities may help shift a part of the estimated 300 metric tons a year investment demand, the government said in a separate statement. The bonds will be issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of five years to seven years with a rate of interest to be calculated on the value of the metal at the time of investment, it said.

But before foreigners rush to Bombay with hopes of monetizing those bars of physical in exchange for cash flow streams, the bond purchases will be limite only to local citizens and capped a just 500 grams per person annually:

In other words, very much like FDR's proposal, what India is hoping to do is entice the population to hand over its gold only not in exchange for a cash payment "here and now", but to use it as a monetary, interest-bearing asset, oh feel free to mock anyone who repeats the old adage that "gold pays no dividends" - in India it now pays interest.

Will the plan work? 

Some are skeptical. "It is unclear if a gold monetisation plan will be able to curb imports. A similar plan launched in 1999 had failed partly due to low interest rates, and bankers fear a repeat unless the government funds lenders to implement the programme. Jaitley declined to give details on how the government will make it attractive for banks."

To be sure, the government can urge banks to ramp up the "deposit" interest making gold that much more attractive a monetary "investment" than mere cash, in effect confirming that this is nothing but a gold confiscation ploy (or asset swap as the purists may claim) not to mention an admission that there is something disturbingly wrong with the Indian financial system and/or economy.

But the one thing to watch for is a shift in the posture of the Indian government: for now participation in the gold monetization scheme is voluntary, and largely geared to the general public with the 500 gram/year limit. But if and when the Modi cabinet starts "urging" the population, and certainly when threats of fines and/or prison time emerge, that is when we will finally have confirmation that the second coming of Executive Order 6102 has arrived. By then, however, the ratio of paper claims to deliverable gold at the Comex should be in the 5 or more figures so at least the price of "pet rocks" should be laughable at best.

* * *

More here: "In India, Gold Is Not Only Money But Now Pays Interest."

The full "scheme" as proposed is laid out below.

 

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Thu, 09/10/2015 - 14:31 | 6532108 ParkAveFlasher
ParkAveFlasher's picture

Gold Shirt Man laughs at these pathetic attempts to confiscate gold.

Thu, 09/10/2015 - 14:32 | 6532157 Syrin
Syrin's picture

I'm sorry officer.   I would love to give you all my gold, but I had this boating accident.....

Thu, 09/10/2015 - 14:44 | 6532207 negative rates
negative rates's picture

Here sir, take my silver bullets and tell your boss to go to hell.

Thu, 09/10/2015 - 14:50 | 6532224 McCormick No. 9
McCormick No. 9's picture

Of course they will confiscate gold in the US. Duh. And for those of you who will only use your gold to buy cash dollars and/or food (if , no- WHEN- they outlaw cash), I will buy your gold for the follwing price- two loaves of wonder bread, three cans of refried beans, or a 15 lb bag of dog food.

(hey, it s t r e t c h e s your food dollar AND makes its own gravy!)

Gold is for kings (elites), not you.

Thu, 09/10/2015 - 14:55 | 6532246 City_Of_Champyinz
City_Of_Champyinz's picture

My gold will remain in the hole I buried it in thank you very much, Fuck the corrupt government.  I will use the silver to buy things i need at that point...

Thu, 09/10/2015 - 15:05 | 6532285 bania
bania's picture

Looks like this Indian guy is about to lose his shirt!

Thu, 09/10/2015 - 15:14 | 6532329 MalteseFalcon
MalteseFalcon's picture

I'm not a gold bug, but it is easy to see the authorities are full of shit on the topic.

"the deposited gold would be auctioned, used to replenish the Reserve Bank of India's reserves or be lent to jewelers."

If your gold gets sold or "lent" to a 3rd party, how is it retrieved?

Utter bullshit.

Thu, 09/10/2015 - 15:32 | 6532403 ebworthen
ebworthen's picture

This thought occurred to me when the Comex went nuts the other day and there were over 200 people to every ounce of deliverable.

You know, they could do it - outlaw precious metals - because it is a psychological war, not a physical one.  They already have the younger generations trained to use plastic cards and their phones, no watches, no cash, even audible music through speakers is dying not to mention cooking yourself a meal.

If you are intentionally creating a dependent underclass of 95% of the population that is completely dependent upon the system (the Kleptoligarchy) you must get rid of tangible assets and life skills.

Another 10 years and anyone using cash, wearing a watch, talking about Gold and Silver, or cooking their own food will be marginalized as one of those "crazy old people".

Thu, 09/10/2015 - 16:03 | 6532642 Pool Shark
Pool Shark's picture

 

 

Idiocracy?

 

 

Thu, 09/10/2015 - 16:26 | 6532821 TongueStun
TongueStun's picture

Shoot any Modiphucker who says such things....

Thu, 09/10/2015 - 16:39 | 6532904 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Ask any Indian and they will tell you the gold in the basement of the temple does not belong to the temple, it belongs to the gods of the temple. It's not about welath, or even culture, it's about religion. Good luck changing people's views on that

Thu, 09/10/2015 - 17:56 | 6533288 Billy the Poet
Billy the Poet's picture

Yeah, and they're all onto the Son of Sikander scam by now.

Thu, 09/10/2015 - 17:35 | 6533198 Max Steel
Max Steel's picture

modiphucker :xD

Thu, 09/10/2015 - 17:33 | 6533189 Countrybunkererd
Countrybunkererd's picture

The "Stupidity Shockwave" is coming fast and hard.  Where I am, as my name suggests, I personally know a dozen people that don't even have a cell phone.  I have a small flip phone and nothing more and have been called crazy for a while now.  I don't need it, i don't care for what it does to people by making them anti-social and calling it social media.  What will they do next?  An i-penis? i-vagina?  They are stupid products feeding off of the mass of unhappy, mal-adjusted, empty souls that can't stop and think about life because it isn't what mommy and daddy promised them.  They find they are exactly average, not a prince or princess, just exactly average.  What a waste of life, sad fools.  Tech has it's needs, but this is the classic bait and switch and the foolish masses are buying into a system that is completely and utterly making them slaves.  The i-crap craze is a religion for all ages and sexes, an empty one at that.  Everyone wanted a "cool" swatch watch in the 80's... or the beenie babies... you want it so i want it too... see how cool we are while someone gets rich, then blame them for being rich by using the stupidity of culture.

Ahhhhhhhhhhhhhhhhhhh...Screw it.  Society has already been flushed, is it a low flow toilet or an old but high speed type of toilet?

 

Thu, 09/10/2015 - 18:23 | 6533386 astroloungers
astroloungers's picture

In 10 years I will be one of those crazy old people.....I'm not sure if I can fix this shit between now and then.

Thu, 09/10/2015 - 15:39 | 6532476 daveO
daveO's picture

They tried import fines to stop it from going into India and never leaving. That just created smuggling. Now, they are going to act as a pawn shop to retrieve the gold. Someone's always desperate for a short term loan. I'm sure some of it will get 'smuggled' back out of the country to feed demand and suppress prices. 

Thu, 09/10/2015 - 15:54 | 6532581 Uncle Sugar
Uncle Sugar's picture

What I can't get is why they still quote it on CNBS and Bloomberg.  There is obvious disdain from the money honey's who talk to the quotes each morning.  If it's so irrelevant, why cover it?  Maybe it's  not irrelevant??

 

Thu, 09/10/2015 - 16:03 | 6532624 Kaervek
Kaervek's picture

They want to create their very own Fort Knox. And I mean who wouldn't? It's immensely profitable.

1. Get all your people's gold

2. Rehypothecate it into oblivion

3. Pay people's interest and anyone trying to redeem their investment with cash (or put them in prison)

[Yes this is basically a ponzi enforced by law]

The worst thing that could happen would be riots, but now you have the gold/cash to keep the police paid and happy.

Fri, 09/11/2015 - 08:35 | 6535200 Groundhog Day
Groundhog Day's picture

The majority of Indians in India might not be educated to understand the inner workings of the ponzi i mean banking sector, however they have this thing about gold engraved into their skulls..."don't part with your gold" "never trust your government".  The older cultures have seen and remember the destruction of paper money more then the "civilized" west.  This plan might just backfire and make it even worse on theri trade numbers.  Additionally,  they have no way or means to enforce a ban on gold or to make holding it illegal.  The entire country would revolt in an instance

Thu, 09/10/2015 - 15:14 | 6532331 Leopold B. Scotch
Leopold B. Scotch's picture

Looters gots ta loot!

Thu, 09/10/2015 - 15:16 | 6532333 Leopold B. Scotch
Leopold B. Scotch's picture

what a load.

Thu, 09/10/2015 - 15:38 | 6532472 Bullionaire
Bullionaire's picture

Seriously, Scotty.  I call "clickbait" on this one. The Tylers should be ashamed.

First, FDR's gold "confiscation" occurred during a gold standard. At this late date, gold has been so agressively demonitized by banksters that they couldn't possibly justify such a move; "Um, yes I know we've said that gold was just a pet rock, but you still have to turn it over to us because, um, because we say so?" Fuggoff.

Second, and I've corrected The Tylers on this multiple times, the 1933 devaluation of the USD vs. gold was SIXTY-NINE PERCENT, NOT FORTY PERCENT.  DO THE MATH, DAMMIT.

And third, .gov can confiscate anything they want from you at any time - see this article from TEN F'N YEARS AGO, straight from the horse's mouth (no not John "Kerry" Kohn):

http://gata.org/node/5606

Can we all get with the program, FFS?

Thu, 09/10/2015 - 18:30 | 6533403 TheReplacement
TheReplacement's picture

I'm going to round 20.67 to 20 for simplicity.  Most people SHOULD be able to work this out in their heads.  Well, most people over 40.  Okay, over 40 and not zombified by bread and circuses.  Basically, anyone with an IQ over retard which leaves, like, at least a few dozen Americans.

-------

Start with $20.

Add 75% of 20 which is $15.

$20 plus 75%($15) is $35.

-------

You get the ballpark idea.  Obviously Billionaire is onto something.  Now to the harder math.  There be decimals and shit here.

Start with 20.67.

Add 69.xxxx% of 20.67 which is 14.33

20.67 plus 69% (14.33) is 35

 

 

 

Thu, 09/10/2015 - 18:31 | 6533408 TheReplacement
TheReplacement's picture

Oh yeah, thanks $B.  This is one of those things someone can read over and not bother to do the math, just ingest and go.  I, for one, was not paying attention.

Say, 69% sounds a lot worse than 40%.  Let's use 40.

Thu, 09/10/2015 - 15:05 | 6532286 Divine Wind
Divine Wind's picture

 

 

 

Does Mr. Patel have neck and back problems?

Thu, 09/10/2015 - 16:24 | 6532810 PTR
PTR's picture

Junebug- He OG'd!

Thu, 09/10/2015 - 15:05 | 6532288 Uber Vandal
Uber Vandal's picture

Why not use a hoard of copper cents and nickels as Kyle Bass did.

They are still one cent and five cents each, no premium either, yet.

Very affordable, and one can still find them walking down the street on occassion.

Thu, 09/10/2015 - 15:18 | 6532348 City_Of_Champyinz
City_Of_Champyinz's picture

I am no expert on recyling nickels, but if the shit hits the fan something tells me they will not be worth much as there will not be much industrial use for the metals in them at that point...

Thu, 09/10/2015 - 16:40 | 6532919 NotApplicable
NotApplicable's picture

Like "junk" silver, they will trade as an alternative currency in a SHTF environment. Of course, barter will still be the premier method while price discovery of alternative currencies seek an equilibrium price.

Thu, 09/10/2015 - 16:16 | 6532758 HungryPorkChop
HungryPorkChop's picture

If you go back to recent history, when worldwide gold supplies were tight the Indian government had high import taxes on the metal to discourage buyers.  Now we're seeing an even bigger scheme being cooked up.  This means one thing, gold supply is very tight again and probably even worse than before.  So this time they're not trying to tax the metal but instead bribe the population to give up their gold.  Remember they were also trying to get the gold from all of India's temples a couple years ago which didn't work out so well for them. 

Let the fireworks begin.  I have a bag of popcorn ready.

Thu, 09/10/2015 - 15:46 | 6532519 KnuckleDragger-X
KnuckleDragger-X's picture

You want my gold come take and as for your silly dog food, you eat it because I have much better things....

Thu, 09/10/2015 - 15:56 | 6532597 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"Of course they will confiscate gold in the US. Duh."~

I would love to see Obama exec order that one. If you think that some eastern states had non-compliance on a recent weapons ban, just think of the non-compliance this would have. Molon labe, Uncle Sam.

Thu, 09/10/2015 - 15:47 | 6532529 robertsgt40
robertsgt40's picture

"20,000 tons, more than double US  reserves"? LMAO I think I have more than the US  in my teeth.

Thu, 09/10/2015 - 14:36 | 6532174 Jackagain
Jackagain's picture

I wonder how long he'd last wearing that get-up in Harlem....

Thu, 09/10/2015 - 14:47 | 6532208 ParkAveFlasher
ParkAveFlasher's picture

Last? Bitchez would be taking bullets for him.

Thu, 09/10/2015 - 14:38 | 6532179 xrxs
xrxs's picture

Gold shirt man = baller.

 

I know where the Indian government can find that physical they're looking for -- Comex. Do it!

Thu, 09/10/2015 - 15:49 | 6532537 847328_3527
847328_3527's picture

The Indians and Pakis I know have kilos of gold and also lots of cash stashed away. Much of it is passed down from generation to generation and is handed down at weddings along with rubies, etc. I have been to some Paki weddings where the gems and 24k gold in the room around people's necks is more then in the fed reserve I bet. The father of the bride said it's passed down from parents to [usually] the first son to get married. It's silly to think any of them would hand any of it over to any gubmint.

And I must say, that 24k looks magnificent against their brownish skin!

Thu, 09/10/2015 - 15:47 | 6532531 RaceToTheBottom
RaceToTheBottom's picture

Cleanest Gold shirt in the hamper.

Thu, 09/10/2015 - 15:59 | 6532614 Theosebes Goodfellow
Theosebes Goodfellow's picture

"And with SOLID gold, that pesky static cling is a thing of the past!"

Thu, 09/10/2015 - 16:05 | 6532656 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

 

 

That guy is Finance Minister Arun Jaitley.  That is an advertisement to reasure Indian plebes that their gov.'s got their back,

and their gold, and their shirt, and soon to get their goat.

Thu, 09/10/2015 - 17:41 | 6533226 RafterManFMJ
RafterManFMJ's picture

A fool and his gold are something something.

Thu, 09/10/2015 - 22:43 | 6534335 StychoKiller
StychoKiller's picture

If most people in India own some Au, then the Govt. is gonna have to arrest around a Billion people to enforce such Law(s) -- good luck with that! :>D

Thu, 09/10/2015 - 14:26 | 6532118 hotrod
hotrod's picture

Seems easier to make Gold a currency and not an IMPORT.

Thu, 09/10/2015 - 14:40 | 6532194 sam i am
sam i am's picture

Is coming to the US safe for the President of Russia?

 

http://thesaker.is/ukraine-sitrep-september-10th-2015-by-scott/

Thu, 09/10/2015 - 15:03 | 6532277 jefferson32
jefferson32's picture

Good article, thank you. The bar was high since it was o/t.

 

Thu, 09/10/2015 - 16:08 | 6532692 Urban Redneck
Urban Redneck's picture

A strangely paranoid rant from someone who is usually more level headed...

Thu, 09/10/2015 - 18:56 | 6533493 Fred C Dobbs
Fred C Dobbs's picture

That is my thinking too.  It seems to me bringing in underpriced gold and silver into your country would be a blessing.  But Dobbsie view of gold is not like other people especially central bankers.

Thu, 09/10/2015 - 14:27 | 6532120 Xibalba
Xibalba's picture

Isn't this the FEDs template? 

Thu, 09/10/2015 - 14:49 | 6532221 negative rates
negative rates's picture

It was, until they somehow forgot where they put it and then had to take fiat money from the citizens, pitiful gvt we have today.

Thu, 09/10/2015 - 14:27 | 6532121 Kaiser Sousa
Kaiser Sousa's picture

if Indian citizens r stupid enough to forfeit their REALMONEY to their banker controlled government who have been trying to steal it/prevent them from accumulating it since the beginning of the "greatest depression" that began in 07'....then fuck them just like fuck the Greeks....

DEATH TO THE MONEYCHANGERS........

Thu, 09/10/2015 - 14:32 | 6532156 agent default
agent default's picture

The thing is Indians are not, and Asians in general are not.  Asian civilizations are a lot older that the West.  They have a long historic experience with big government and centralization.

Thu, 09/10/2015 - 14:28 | 6532127 silverer
silverer's picture

Yeah.  All the ZH troll posters that keep laughing at gold.  Well, here you go.  Another example of why the pet rock is more than a pet rock.  Again.

Thu, 09/10/2015 - 17:47 | 6533245 AGAU
AGAU's picture

Stupid pretty barbarous space rock relics that we don't even need any more.

Don't waste your money on gold, it's not even backed by anything.

Thu, 09/10/2015 - 14:29 | 6532128 Zymurguy
Zymurguy's picture

possession is... well you know the rest.

once you hand over the phyz to the banks = .... aaaaaaand it's gone!

Thu, 09/10/2015 - 14:29 | 6532131 Possible Impact
Possible Impact's picture

The only Gold Bonds you should have is Medicated Powder for Athlete's foot fungus

http://www.goldbond.com/extra-strength-body-powder.html

Otherwise, any monetary Gold should be strictly in your physical possession.

Thu, 09/10/2015 - 15:44 | 6532506 TalkToLind
TalkToLind's picture

Well played sir.  And no, I can neither confirm nor deny suffering from the fungal affliction you've mentioned.

Thu, 09/10/2015 - 16:03 | 6532644 Theosebes Goodfellow
Theosebes Goodfellow's picture

Not to mention the heartbreak of psoriasis.

Oops, sorry. I mentioned it.

Sorry.

Thu, 09/10/2015 - 14:29 | 6532134 Charles Nelson ...
Charles Nelson Reilly's picture

yea... good luck rounding it up from those fuckers.  1.3 billion people, probably 50% own some form of gold (unlike the dipshits in the US).  That ought to go over well.

Thu, 09/10/2015 - 15:07 | 6532295 agstacks
agstacks's picture

"Honey, you know all that gold my family gave to you..?"

Thu, 09/10/2015 - 15:19 | 6532356 Doña K
Doña K's picture

True but American women own lots of Louis Vuitton, Koors bags, MB's Lexus and men own Masserattis, Corvettes, Ferraris and pickem up trucks. All financed. Who wins then? s/  

Thu, 09/10/2015 - 14:29 | 6532136 davidalan1
davidalan1's picture

"The sovereign gold bonds are aimed at people buying the precious metal as an investment"

 

Why did i laugh at this statement?  I was thinking of Kyle Bass....taking 1Billion in physical.

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

Thu, 09/10/2015 - 14:44 | 6532210 astoriajoe
astoriajoe's picture

Funny how in the example, Mr. Bass asked what if 4% of the people want delivery. 

Mr. Comex responds, Oh kyle, that never happens. We rarely get a 1% delivery. 

So the question, today becomes, what if 0.6% of people want delivery, because that is where we seem to be. 

I presume the answer will be cash settlement. 

I would like to think that people will be up in arms over this, although I suspect that they will just go on as if nothing has happened. I wonder how many months will it take before it becomes a real issue. could they just keep paying in cash and setting the "price" as well? 

Thu, 09/10/2015 - 15:00 | 6532267 davidalan1
davidalan1's picture

EXACTLY....whats even better is his incredulity over how when they went to audit the physical (Im paraphrasing) it was as if they weere playing a shell game...with him...hahaha

Thu, 09/10/2015 - 16:31 | 6532852 astoriajoe
astoriajoe's picture

I wouldn't want to be the main refiner, or delivery service for comex. Maybe a tianjin style gold-explosion causing comex to declare a force majeur. 

Thu, 09/10/2015 - 14:30 | 6532142 buzzsaw99
buzzsaw99's picture

Yeah. Well, that sounds like a pretty good deal. But I think I may have a better one. How about, I give you the finger. [/Neo]

Thu, 09/10/2015 - 14:31 | 6532150 Silverhog
Silverhog's picture

If they take your Gold, they might as well come for house and car. Total chaos will ensue. 

Thu, 09/10/2015 - 14:35 | 6532171 ZeroPoint
ZeroPoint's picture

They won't come for those. Houses and cars are sources of fee income for government.

Thu, 09/10/2015 - 14:32 | 6532158 ZeroPoint
ZeroPoint's picture

The plan failed because of low interest rates? - or maybe people who recognize the value of gold aren't as stupid as Indian bankers would like them to be.

Thu, 09/10/2015 - 14:32 | 6532160 Bullish_NoMatte...
Bullish_NoMatter_What247's picture

Bullish.

Thu, 09/10/2015 - 14:35 | 6532167 Chris Dakota
Chris Dakota's picture

Indians like to wear their gold, always have.

Your gold belongs to the Jews, dontcha know?

Thu, 09/10/2015 - 14:53 | 6532237 Seasmoke
Seasmoke's picture

That's why they call it JEWelry

Thu, 09/10/2015 - 14:34 | 6532169 JustObserving
JustObserving's picture

India is in America's orbit. They have to implement even friendly suggestions by the US.  Gold imports of 1000 tons a year by India will not be tolerated.

Thu, 09/10/2015 - 15:35 | 6532361 angel_of_joy
angel_of_joy's picture

Indians know better than to pay attention to any crap emanating from their government... Good luck convincing them to release their gold !

Thu, 09/10/2015 - 16:09 | 6532701 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

 

 

The West is probably encouraging this move inorder to get more gold in the global pool,

to keep the rehypothication hamster wheel spinning.

Thu, 09/10/2015 - 14:34 | 6532170 Jackagain
Jackagain's picture

This will piss off those Hindus moe than telling them the Ganges is a rolling cesspoll...

Thu, 09/10/2015 - 14:35 | 6532172 debtor of last ...
debtor of last resort's picture

First take the gold and then devalue the rupee. Fuckers.

Thu, 09/10/2015 - 14:36 | 6532173 Mat Cauthon
Mat Cauthon's picture

I'm just waiting for the leaders of Hinduism to sic any one of their millions of (g)ods on the government for even thinking of trying to take gold from the people.  India, or the Indus Valley, is the homeland of the original Thuggee (Thugs), and they don't take this kind of stuff lightly.

#Thuggeelife

 

 

Dovie'andi se tovya sagain (It's time to toss the dice)

The Daily Economist

Thu, 09/10/2015 - 15:07 | 6532176 Latitude25
Latitude25's picture

This Indian and others have known that their rulers have been thieves for hundreds of years.  So no, Indians will not fall for this ridiculous monetization scheme

https://youtu.be/4T-b6tUT-hY

And when you see this video you will understand the love Indians have for gold and a paper promise will never work.

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

Indian leaders are very comfortable saying "yes boss" to the corrupt western bankers and then doing what the rest of the 1.2 billion of their countrymen are doing.  BUYING PHYSICAL.

Thu, 09/10/2015 - 14:38 | 6532178 Mewa
Mewa's picture

Bloomberg must be assuming that Indians are as stupid as your average American to swap physical gold based on fiat paper...the fact of the matter is they have been trying to curb gold demand for ages in Indian...Most Indians have an intelligent mistrust of paper fiat and will never part with physical for some devalued pieces of paper....Now trot that scheme out after Comex goes down and there will be plenty of dirtbag Wall Streeters that will ouzing praise....

Fed is obviously getting nervous about PM going bidless....that is nobody will sell PM at any price....

Now about that 226 Comex paper to physical ratio....MF Global default anyone?

 

Thu, 09/10/2015 - 14:39 | 6532187 doggis
doggis's picture

TD - THIS HAS NO CULTURAL BACKGROUND WHATSOEVER! GOLD IS A CULTURAL DNA FOR INDIA. THIS SCHEME WILL HAVE TO UNDO THIS CULTURE [PROBABILITY = 0] FOR THIS HYPOTHECATION SCHEME TO WORK.

 

I KNOW PROFESSIONAL INDIANS LIVING HERE IN THE USA THAT WOULD TAKE DEATH FIRST THAN PART WITH THEIR GOLD.

 

 

Thu, 09/10/2015 - 16:36 | 6532889 FutureShock
FutureShock's picture

Emerging market money invested  with Fed printing is pulling out faster than it went in, Indians will be hurting and WILL part with the gold, Hoping they can get it back makes them feel better even when both they and the Gov know they won't see it agian. 

Thu, 09/10/2015 - 14:40 | 6532191 davidalan1
davidalan1's picture

JUST NOW on CNBC..."IS THERE HOPE FOR GOLD???

Thu, 09/10/2015 - 14:52 | 6532229 negative rates
negative rates's picture

Sure there is, just not with cnbc in the picture.

Thu, 09/10/2015 - 15:16 | 6532321 Kaiser Sousa
Kaiser Sousa's picture

from CNBS....

"Gold can't catch a break"

http://video.cnbc.com/gallery/?video=3000419132

and "Gold's worst losing streak since '97"

http://video.cnbc.com/gallery/?video=3000419159

 

fucking hilarious...

Thu, 09/10/2015 - 15:56 | 6532595 sandiegoman
sandiegoman's picture

the hilarious part is that it is true...

Thu, 09/10/2015 - 14:40 | 6532192 DirkDiggler11
DirkDiggler11's picture

Hell yea, the return of the Cool Cat with the Gold Shirt. I've been wondering where he has been hanging out as of late.

He's probably been out at the local singles bar in BOMBAY and knockin boots every night as his shirt draws the women in like a moth to the flame....

We at ZH have to give this dude a name, he just can't go around as "The Guy with the Gold Shirt" forever ..... I'll start with a suggestion, we can call him "Pussy Magnet".

Thu, 09/10/2015 - 14:50 | 6532223 general ambivalent
general ambivalent's picture

Goldywood.

Thu, 09/10/2015 - 17:38 | 6533214 fishwharf
fishwharf's picture

His name is Raj Patel, and he works at the Chase call center in Bangalore.  His bling is fake, and is magnetically attactive.

Thu, 09/10/2015 - 19:34 | 6533629 DontFollowMyAdv...
DontFollowMyAdviceImaDummy's picture

We at ZH have to give this dude a name, he just can't go around as "The Guy with the Gold Shirt" forever ..... I'll start with a suggestion, we can call him "Pussy Magnet".

 

He's Mister T's cousin: MISRAH T

Thu, 09/10/2015 - 14:40 | 6532193 Al Huxley
Al Huxley's picture

I wonder why all those wealthy bankers are so willing to take gold off everybody's hands when it's such a poorly performing asset.  It really seems unlike them.  Oh well, I'm sure there's no ulterior motive at play, just a bad decision on their part...

Thu, 09/10/2015 - 14:45 | 6532211 general ambivalent
general ambivalent's picture

The Shemitah Asteroid will unload more gold than a nazi train.

Asteroid mining is the future according to Big Think.

Thu, 09/10/2015 - 14:45 | 6532212 MrMorden
MrMorden's picture

Uh, so what happens at the end of the bond term when the customer wants his/her gold back?

Aaaaand...it's gone.

It says right in the terms the gov't can sell it.  So please to be having some depereciating fiat, tank you berry much. 

And I'm SURE the Indian gov't is doing this out of the goodness of their hearts, and will be taking a loss on all these transactions... 

Thu, 09/10/2015 - 14:51 | 6532227 sudzee
sudzee's picture

Indians don't trust politicians and their printed money. This plan is already doomed.

Thu, 09/10/2015 - 14:54 | 6532238 Fukushima Fricassee
Fukushima Fricassee's picture

I am the mother fucking gold standard.

Thu, 09/10/2015 - 15:16 | 6532340 Bastiat
Bastiat's picture

+1 for "The Last Detail" reference!

Thu, 09/10/2015 - 14:58 | 6532256 q99x2
q99x2's picture

Why do people allow governments to exist? What's wrong with them?

Thu, 09/10/2015 - 15:24 | 6532383 messymerry
messymerry's picture

governments are like aspirin:

Too little and it doesn't help,

Just right and it's beneficial,

Too much and it's deadly...

We are currenly running at about 4x too much.

;-D

 

Thu, 09/10/2015 - 16:14 | 6532739 Lost in translation
Lost in translation's picture

To fund your college edumacation.

Thu, 09/10/2015 - 14:59 | 6532259 coast
coast's picture

when things collapse, they can always take their coins to a coin dealer who has no money because the banks are closed...wake up.

Thu, 09/10/2015 - 14:59 | 6532260 jakesdad
jakesdad's picture

"scrambling to move from private hands to the public ledger." - I believe the word for which you're looking is "steal"...

 

"or be lent to jewelers" - who would then do what w/it?  lease jewelry to consumers?

 

finally, if their concern is current account then the gold already in the country is sunk cost so why not just slap a big tax/tarrif on importation?  (I mean, other than the banks don't get to steal the value of it in the process)

Thu, 09/10/2015 - 15:38 | 6532283 agstacks
agstacks's picture

"So I can really give you this gold and I can walk out of here with that decorative gold-colored bond? What's the catch?"

 

The 500g limit per year reminds me of the fake gold plated coins they sell on TV.  "A strict limit of 10 per caller" 

Thu, 09/10/2015 - 15:07 | 6532296 loveyajimbo
loveyajimbo's picture

They are counting on a large part of their population to be just as moronic as those here in the US that still support Obongo or his ugly sister Hilly-roid.

Thu, 09/10/2015 - 15:11 | 6532312 Conax
Conax's picture

It might work, but the gold certificates have to look good hanging around their necks, festooning a shirt or dangling from a pierced nose.

I'm guessing it won't pass muster.

Next stupid idea...?

Thu, 09/10/2015 - 15:16 | 6532319 withglee
withglee's picture

the barbarous relic continues to be seen as the safest store of value among India's vast population (roughly 20% of the world's total),

 

For the sake of argument, lets grant that this is true. That means, with no one in the world besides Indians seeing gold having any value at all, the Indians see it as the safest store of $10,000 worth of value (per Indian person).

Well big deal! How are they going to safely store all their other value?

Why $10,000 per Indian person? Run the numbers. 5oz of gold per Indian person. Miners and computer grinders willing to produce 1oz of gold for $2,000. 5x $2,000 = $10,000 ... 1/4th a non-skilled person's wage in the good old USA.

This nonsense of gold be a useful store of value has got to stop!

Thu, 09/10/2015 - 15:18 | 6532350 Latitude25
Latitude25's picture

"That means, with no one in the world besides Indians seeing gold having any value at all"

Truly you are a complete idiot.

https://www.bullionstar.com/blogs/koos-jansen/record-monthly-gold-export...

Thu, 09/10/2015 - 15:50 | 6532524 withglee
withglee's picture

Truly you are a complete idiot.

Support your assertion.

If you're disputing the Indians being the only persons valuing gold, I did not say that. The article singled them out. I just granted, for the sake of argument, the article's observation and then illustrated the impact ... and how gold, even if held only by that limited portion of the world's population, doesn't come close to protecting the value those people need to protect. A high school kid working summer jobs creates that much value.

Thu, 09/10/2015 - 16:03 | 6532648 Latitude25
Latitude25's picture

So how is it that you seem to know what value that Indians need to protect and what would ever drive you to the illogical conclusion that gold is the only thing Indians buy for storage of wealth?  And if you know anything about other cultures you will know that most Indians work for very low wages and yes probably less than US high school students.  So does their low wage make them somehow inferior and not worthy of storing wealth in gold?  Indians have centuries of experience watching their rupees drop in value and gold has PROVEN to them that it is safe storage of wealth.  You, on the other hand, have how much experience either personally or through your family history with gold preserving wealth?

Thu, 09/10/2015 - 17:21 | 6533095 daveO
daveO's picture

Centuries vs. only 44 years in the US since the Fed gov went totally corrupt. US citizens are the ones who are in for a rude awakening. The average baby boomer, who has been a debt slave their whole life, will have less to show for their lifetime of labor than a poor Indian with a gold stash.

http://news.nationalpost.com/news/world/up-to-1-trillion-in-gold-is-held...

Notice this last paragraph of propaganda.

“If the temple gold goes to nation-building and strengthening the economy, that is good karma, too,” said Aastha Desai, a 38-year old businessman.

The writer works for the Washington Post, of course.

Thu, 09/10/2015 - 17:24 | 6533149 withglee
withglee's picture

So how is it that you seem to know what value that Indians need to protect and what would ever drive you to the illogical conclusion that gold is the only thing Indians buy for storage of wealth?

I don't know what value they need to protect. But I do know that if it is only $10,000 per person, it's not worth writing an article about. And that's "all" gold can protect.. There's not enough of it to protect more wealth than that.

And gold, not being the only storage of their wealth, it is a very minor store of their wealth ... or storage of wealth is not an issue because they don't have significant wealth to store.

Indians have centuries of experience watching their rupees drop in value and gold has PROVEN to them that it is safe storage of wealth.  You, on the other hand, have how much experience either personally or through your family history with gold preserving wealth?

You make an assertion that has to be totally bogus to anyone taking the time to run the numbers. You can run them in your head, they're so simple.

Thu, 09/10/2015 - 22:57 | 6534377 StychoKiller
StychoKiller's picture

Well, YOUR assertion that there isn't enough Au in the World is ONLY true at the current $/Toz.  Raise that $/Toz to around $100,000/Toz and recompute.  Check yer premises.

Fri, 09/11/2015 - 08:08 | 6535093 withglee
withglee's picture

Raise that $/Toz to around $100,000/Toz and recompute.  Check yer premises.

Do that and everyone becomes a miner and a computer grinder. People who have an oz now are, for a brief period, 50 times more wealthy ... until the new steady state is reached ... at which point they find the dollar devalued by 50 times.

You people correctly complain about Keynesian practices ... then propose practices equally as unnatural and stupid.

You should not only check "your" premises, you should check your logic ... and learn a little about dynamic adaptive systems.

Amazing!!!

Thu, 09/10/2015 - 15:15 | 6532335 Chuck Knoblauch
Chuck Knoblauch's picture

Why do you call paper backed by gold a confiscation of gold?

Is this your first grade book report on the gold standard?

Thu, 09/10/2015 - 16:47 | 6532952 Inbetween is pain
Inbetween is pain's picture

Because this is ZH where everything is exaggerated or a conspiracy or both.

Thu, 09/10/2015 - 20:07 | 6533751 litemine
litemine's picture

There is NO TRUTH in the News or inf from the Governments.

Many items posted here are well researched and the Dots Connected.

You on the other hand should put your head back in the sand and Shut the Fuck Up.

Thu, 09/10/2015 - 23:01 | 6534387 StychoKiller
StychoKiller's picture

A Govt that's willing to lie to its people (example:  Gulf of Tonkin), should then be trusted to return a citizen's property??  Check yer premises.

Thu, 09/10/2015 - 15:16 | 6532337 Jethro
Jethro's picture

Gold confiscation in India? LOL!!!!!! Good luck with that.

Thu, 09/10/2015 - 16:09 | 6532699 Pancho de Villa
Pancho de Villa's picture

No Kidding!  I recently had a surgery and a bit of recovery time spent in the hospital where lot's of Indian nurses work. These women still wear their traditional jewelry around their necks, on their ears, their wrists, etc. and they accept compliments very graciously!

 

It is still ingrained in their culture!

Thu, 09/10/2015 - 17:13 | 6533089 Jethro
Jethro's picture

I lived in New Delhi for about 15 months back in the early/mid 90's. Then I traveled around in Nagaland (on the border with Myanmar) for about a month a couple of years later.

The Indian government will confiscate precious little gold for the reason you just stated. It's a cultural thing.

Sat, 09/12/2015 - 01:43 | 6538885 Wild E Coyote
Wild E Coyote's picture

That culture came from thousands of years of historical experience with bad rulers and useless currencies.

Thu, 09/10/2015 - 15:28 | 6532402 sudzee
sudzee's picture

POG in India in 1980 was 1300 rupia and now trades at 73600 rupia. Indians trust gold not corrupt politicians with a printing press. 

Thu, 09/10/2015 - 17:22 | 6533129 Uchtdorf
Uchtdorf's picture

POG in USA in 1971 was $35 and now trades at $1110. Yet Americans still trust corrupt politicians. I know people who are talking about which Republican candidate will do the best job if elected POTUS. Put a fork in it already.

Thu, 09/10/2015 - 15:36 | 6532462 Pumpkin
Pumpkin's picture

I hope their population stones the criminals to death.  What our grandparents should have done to FDR.

Thu, 09/10/2015 - 15:40 | 6532483 jjsilver
jjsilver's picture

Executive order 6102 only applied in the District of Columbia and it's territories, not states of the Union.

Thu, 09/10/2015 - 17:23 | 6533120 breadonwaters
breadonwaters's picture

Is that true?   I never heard that one little caveat in all the times i've heard aout 6102.  I will check that myself....tnx!

NOPE! WICKY says "Continental United States"  ...please clean up your act ...i'll e watching for further BS from you.

Thu, 09/10/2015 - 15:52 | 6532548 Son of Captain Nemo
Son of Captain Nemo's picture

"When the student is ready the teacher will appear"...

If this happens watch another "Gandhi" reappear because it will be the equivalent to the fight they had in throwing Britain out of India!...

Nice try recouping your losses in the paper COMEX through India's reserves Goldman Suckmeoff/JP ChaseYourself! 

You'll probably have better luck starting and winning WWIII with Russia and China to get their PHYSSSS first!!!!

Thu, 09/10/2015 - 17:18 | 6532556 LawsofPhysics
LawsofPhysics's picture

What gold?  next.

Thu, 09/10/2015 - 15:53 | 6532570 Spiritof42
Spiritof42's picture

Well certainly it wouldn't work in the USSA. Anybody who owns gold does so for the purpose of getting their money out of the system.

I like silver better because of its industrial importance. If manufacturers want it, they'll have to pay for it.

Thu, 09/10/2015 - 18:21 | 6533377 Pumpkin
Pumpkin's picture

With what?

Thu, 09/10/2015 - 20:03 | 6533740 litemine
litemine's picture

How about Trade.  I will Trade you 1oz of gold, for say, Your House?

Thu, 09/10/2015 - 16:01 | 6532632 TalkToLind
TalkToLind's picture

In an effort to weaken the spirits of gold hoarders, governments and media outlets will now refer to them as insects.

Thu, 09/10/2015 - 16:11 | 6532713 general ambivalent
Thu, 09/10/2015 - 16:32 | 6532865 shovelhead
shovelhead's picture

The Indian Govt. is jealous of the Comex Ponzi and want their own

Thu, 09/10/2015 - 16:46 | 6532915 Quinvarius
Quinvarius's picture

It doesn't make sense to limit it to 500 grams and locals only if they actually want that gold for themselves.  This is the kind of thing that makes you go out and buy an additional 500 grams a year to deposit it for interest, just as if you were maxing out an IRA contribution.  Indians are not going to give up their existing gold.  They actually use it for social reasons.  And this surely is not going to unlock any hordes.

Thu, 09/10/2015 - 22:29 | 6534284 Aussiekiwi
Aussiekiwi's picture

Limit of 500gms because they want you to think there is limited availability to convert, if they made it unlimited it would be obvious it is a scam.

Thu, 09/10/2015 - 17:02 | 6533034 Hongcha
Hongcha's picture

Oh yes, it's going to be good if the govt. starts sending envoys door-to-door to try to claw back gold.  They will get stoned for their trouble - and not in the good way!  Most of rural India is stone-age and we will see some very rough "frontier justice" if they try to take out the gold.

Thu, 09/10/2015 - 17:17 | 6533108 cinderalle
cinderalle's picture

there is something brewing in the gold market

Thu, 09/10/2015 - 17:28 | 6533172 pulladan
pulladan's picture

Naw.. This is a far cry from confescation.  Any type of gold confescation in India will come with heavy resistance and rioting in the streets.  The Indian populace in general,  from the rich to poor,  all have some form of gold holdings.  It could be a few grams but effects the entire populace.

This is another futile attpemt to enter into paper gold in India.  What fuckin nonsense.. Indian women will NEVER settle for paper gold!  

Thu, 09/10/2015 - 22:26 | 6534276 Aussiekiwi
Aussiekiwi's picture

They can hang their paper certificates arounf their necks.

 

Thu, 09/10/2015 - 17:34 | 6533194 U4 eee aaa
U4 eee aaa's picture

Wow. Do they really think gold holders are that stupid?

Thu, 09/10/2015 - 18:11 | 6533342 I-am-not-one-of-them
I-am-not-one-of-them's picture

and that guy ain't sporting no 10k or 14k shit the Westeners are fond of

Thu, 09/10/2015 - 22:31 | 6534264 RevIdahoSpud3
RevIdahoSpud3's picture

I have so little gold that I couldn't be on the .gov radar if I held it next to the meter. I have silver in the form of dollars from back 55-60 years ago when I mowed lawns and it was most often that I would get paid 1 or 2 dollars for my work. At the grocery store change was given in silver dollars. I used to find it fun to look at the mint dates of the 19th century and consider how well intact they were given that some had been in circulation for 80 odd years at that time already. They are now held not as a store of value but as a momento of my lifes journey and meaningful only to me. There were gas stations in my area that took only silver dollars. The pumps were coin operated. Generally drop a silver dollar into the slot and it would pump 3-4 gallons, enough to spend the evening "dragging" main which was social convention at that time. Now the most precious metal I own is lead, mostly linotype and around 500#. I coined a saying a while back and that is he who owns the lead owns the gold and silver. In a way lead is like a gold certificate except...in order to redeem it you have to find someone who actually has physical gold. That would most likely be someone's jewelry and then it's a subjective value due to the fact that any jewelry store (pawn shop) has gold trinkets but gold jewelry is also sold at WalMart if you get my drift. So...if a person does store physical gold how is it traded? Most of the public is ignorant of the value and under duress would I trade 5 cans of soup, some rice and beans for a gold coin if society collapses? What idiot is going to give me the water, food, clothing, gas ect. at the equal value that I place on a gold coin and, in extreme situations who would want gold vs. food? Gold seems to be thought of as a "store" of value. If SHTF then in the aftermath "recovery" gold "may" be something worthwhile. This thinking is conflicted to some degree. At first, during upheavel gold is stored and then magically, when everything is all better gold is the equalizer? If societal events get so bad that it bottoms out to a Mad Max scenario, what guarantee is there that recovery will come and normalacy regained? None! That's why some things, under extreme conditions are worth more than gold in my opinion. Lead, primers, powder, guns, 22 shells, tires, oil, gas, sugar, beans, whiskey-vodka, dog food, water? There are so many tangibles that will function better than gold or silver that I am mind boggled  by those who persist in gold as the store of the future. One poster above stated "gold is for kings". That's good because not only will the king have gold but he will also have soldiers, arms, food. The gold will be for indulgence. The army, arms and food will be for essentials, even for kings.

Thu, 09/10/2015 - 23:17 | 6534426 hedgiex
hedgiex's picture

No worries for India. The preys are far more robust. India has large porous borders and open seas that their own variant of Predators are impotent. Hooray to the growing global underground economy that shall receive more boosts. 

Thu, 09/10/2015 - 23:21 | 6534427 vkr
vkr's picture

I am from India. I don't think this is a gold confiscation scheme. Confiscation gold of Indians could be a very difficult task. I always think that Westeners does not understand Indians fascination with gold properly. For Indians Gold is something which has a lot of emotional values. A lot of the gold jewellery traditionally get inherited across generations. So its not that easy to confiscate something which was originally your grandmothers etc. Another problem the current right wing BJP or any Government will have is that so much Gold is lying with many temples. The Sree Padmanabha Swamy Temple in Kerala (where I am from) and Tirupati Temple in Andhra have the majority of temple gold. Now there was a huge discussion (in Kerala) on how this gold should be taken from Temple and used for welfare of state and people. The currently ruling party opposed it as they are Hindu right wing. Now if any confiscation attempts happens, they may have to first confiscate the temple gold first. Now that means sure shot riots etc.

 

Without any doubt this scheme is a behind the back confiscation attempt. How can you pay interest on something which earns you nothing? Only some fand boys of Prime minister Modi and BJP fellows are going to fall for this. Indians always keep gold as a "last resort investment" . In an emergency you can go to any bank and get a decent loan against gold without much fuss. You just need an Identity proof that's all. 

So it's gonna fail big time. I recently was talking about the same to a very senior neighbour of mine. He was actually interested in the scheme because he though it was a great way to generate some income on an asset which simply lies around and also is a security issue. But when I mentioned that they may take your gold and later will give you new gold after the bond period is over, he bailed out. Why? Because the gold ornaments he and his wife had emotions attached to it. It was given by their parents, or gifted by kids etc. Remember you have no idea of what Gold means to an India.

It may be just a piece of yellow metal for others across the world, but for an Indian each one has a story to tel which will bring tears to our eyes.

Remember this follows a failed attempt to ban import of Gold to India. People smuggled it big time inside.

Now which Idiot is after my gold, run for your life....

Thu, 09/10/2015 - 23:56 | 6534522 Jack's Raging B...
Jack's Raging Bile Duct's picture

I remember a bank in Thailand paying interest on deposited gold. They paid something like...10% APR.

...and then it was gone.

This scheme is no more ridiculous. Sure Mr. Bankster. I'll "loan" you my gold so that you can pay me a pitance for it while rehypothecating my physical to crash the price of my said physical. Fuck you!

Fri, 09/11/2015 - 03:50 | 6534815 Aussiekiwi
Aussiekiwi's picture

Thats a very good point Jack

 

Sat, 09/12/2015 - 10:13 | 6539290 vespa330
vespa330's picture

Did you ever read the FDR 1933 Executive order? Obviously not. You were allowed to keep all coins deemed collectible which was all coins,plus $100 in bullion. They wanted the 400 oz bars which countries use not $20 Gold pieces. Also they did not confiscate silver. They paid you in silver if you requested. Get the facts straight. 

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