Indians Urged To Give Up Their "Idle Gold" For The Good Of The Nation

Tyler Durden's picture

One month ago, when reviewing India's ploy to monetize the thousands of tons of gold held by the broader population through the issuance of "gold-backed bonds" (which would need to offer a rate of interest greater than inflation to be attractive but they won't), we asked if this is "the start of India's gold confiscation."

As a reminder, as part of the plan, Indians would be allowed 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.

When stripped of its pompous rhetoric, what India is offering is simple: a gold-for-paper exchange, which however in a culture where gold has been the definition of money for centuries, would likely be a non-starter from the beginning. One look at the chart below showing Indian gold demands is sufficient to show just how ingrained in the Indian psyche gold hasbecome.

However, as we said a month ago, just because it is doomed from the beginning, at least in its current iteration, does not mean it won't be tried (see: Abenomics)... or adjusted. Because this proposal was nothing short of the initial shot across the gold confiscation bow. Here is what else we said:

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.

Fast forward to this weekend when while we still await the Indian government to unveil the "threats and fines" part, it started the "urging" when during an address on his monthly radio programme of "Mann Ki Baat", Indian prime minister Modi "exhorted people to help convert gold to the nation's economic strength by joining in various schemes to be launched soon" adding that "gold can be converted from dead money to an economic force. To leave gold lying as dead money is behaviour not in sync with the modern times," he said.

We are grateful for this stark admission by India's prime minister that in "modern times", possession of a barbarous relic gold is a activity best relegated to barbarians - you see, "modern people" are all about lending, and rehypothecating their paper gold.

Still, Modi was at least truthful in noting that accumulating gold as a form of economic security is deeply rooted in India's social tradition; as a result we expect the threats of fines and incarceration to follow shortly.

For those who are unfamiliar, the Khaleej Times reminds us of the details of India gold monetization plot: 

Earlier in the week, the Reserve Bank of India issued norms for implementation of the gold monetisation scheme, under which customers can deposit their gold in banks and earn interest on it.

 

The minimum deposit required will be 30 grams of gold with fineness measuring 995. It could include raw gold in the forms of bars, coins and jewellery, excluding stones and other metals.

 

On maturity, the principal and interest will be linked to the prevailing price of gold at the time. The depositor will have the option to take gold or equivalent rupees.

 

The union cabinet approved the scheme last month.

As for the motives, we have covered them before, but here they are again: "the objective of the scheme is to mobilise gold, give a fillip to the gems and jewellery sector by making the metal available from banks on loan and reduce the reliance on imported gold."

In other words, to take it away from the population. 

And when this peaceful attempt at "remunerated" gold sequestration fails, the less "amicable" version of gold confiscation - usually involving threats of bodily harm and prison time - will emerge, as it always does when desperate economies scramble to force their population to stop saving (by buying gold), and start spending.

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Pladizow's picture

He may have better luck convincing them to eat beef!

FL_Conservative's picture

Please send it to my attention for safe keeping in my Nigerian PM storage facility.

Deathrips's picture

Take the man who said this and disembowel him in front of hungry hogs!!

 

Hold IT!!

RIPS

Manthong's picture

FU and the sacred cow you rode in on.

SMG's picture

Translation: "Please let us rob you of your gold."

SWRichmond's picture

To leave gold lying as dead money is behaviour not in sync with the modern times," he said.

Translation: "Please let us rob you of your gold."

You have translated that correctly, sir. 

"To leave you money outside the system where we cannot steal through inflation it is not in sync with modern times".

In the coming gold explosion, either the banks will get rich, or the people of India will get rich.  Which will it be?

Supernova Born's picture

Somehow, "idle, dead" gold beats as loudly as the tell-tale heart under the bed of every central bankster.

Karlus's picture

Reminds me of those ads to sell your "old gold." Or the widow that brings in the deceased husband's silver coin collection to the pawnbroker and asks "Are these worth anything." Pawnbroker (seeing all the mercury dimes and silver halfs "Not really, but I will get you the best price I can."

Thought Processor's picture

 

Hey......   about that gold you own.........

 

People from India aren't that stupid.  There is a reason they value gold above all else as a store of wealth.

 

Stuck on Zero's picture

Getting people to give up their gold is a simple two step process: 

 

1) Form a stable government that will last thousands of years. 

2) Issue a currency with essentially zero inflation that lasts thousands of years. 

That satisfied, people will give up their gold for the convenience of the currency.

Majestic12's picture

"Indians Urged To Give Up Their "Idle Gold" For The Good Of The Nation"

Well I guess they will go out and rape some more 4-year old children with metal objects again...

Those damn women and children! Take my gold will you!

Namaste!

Fahque Imuhnutjahb's picture

 

 

So presumably the Indian gov./Central Bank wants to rectify their current account deficit. or at least that's the pretense for this"urging".

But, could there be another motive? Possibly the London bullion banks & BOE are beseeching India to access gold to lease to them

so as to maintain these "reasonable" pricing levels we've seen of late.  OR--  Is there a move afoot within the Worlds Central Banks

and the BIS to phase in a new currency regime, which will be partially backed with gold.  A currency basket forming the SDR with a

Tier 1 collateral percentage.

nufio's picture

in india the dowry system is still VERY prevelant even among the very wealthy families. Also most of the land + business interests are inherited by the male heirs. In most of the cases, the female child gets her inheritence in the form of gold that is usually passed on as dowry. So whenever a female kid is born, parents buy gold every year so that they have enough to give for her dowry for marriage. Most of this is in the form of jewellery.

This is not at all an uncommon image in indian weddings. http://www.ilfordrecorder.co.uk/polopoly_fs/1.4155421!/image/image.jpg_gen/derivatives/landscape_630/image.jpg

From what I know all this is promptly moved to a locker and sits there as a family asset. 

India does have a lot of gold with the people (as opposed to with the government backing the currency) hidden in various bank lockers. Most indian middle class familes have 2 to 3 bank lockers to store their gold. 

 

NoDebt's picture

OK, so let's back up here, boys and girls.  Let's take a closer look at this: "Idle gold".  

Idle gold?  What the fuck does that mean?  Is that anything like owning an "idle house" or "idle stock certificates"?  The money that was circulated to buy that gold went back into the economy like the purchase of anything else would.  If you buy this highly specious "idle gold" argument then you should also buy into the fact that nobody should ever save any money for any reason.  Idle gold my ass.

813kml's picture

Gold left idling in the driveway is the leading cause of global warming.

Majestic12's picture

"Gold left idling in the driveway is the leading cause of global warming."

But you win Carbon Credits for driving that gold in the market.

In fact, drive it over to Goldman-Sachs and "fill-'er up"!

You are Jewish, aren't you? Or "Gold-ish"? How about Jack "Lew-ish"?

Oh, you're Christian? Then, "Pew-ish"?

Ok, I'll stop. You can stop hitting me.

TheRideNeverEnds's picture

"nobody should ever save any money for any reason"

Now you are getting it! Krugman would be proud.

Majestic12's picture

"nobody should ever save any money for any reason"

What if it falls into the water and it can't swim?

ali-ali-al-qomfri's picture

Krugman hangs out at theatre's lookign for "lucky" actors who broke thier leg to use as evidence of GDP growth.

Dead Canary's picture

Sacred cow's make the tastiest burgers.

Majestic12's picture

"Sacred cow's make the tastiest burgers."

Sacred hamsters are better.

Better than gerbils anyway...too much dark meat.

MalteseFalcon's picture

Not really a fan of gold, but still I have to laugh. 

Hey government of India, if you want their gold, offer them something they may want:

A much, much higher price.  And a vastly reformed, far less risky economy.

 

Handful of Dust's picture

"Take peeples gold lead to civil unrest."

 

~ Old Ghandi Proverb

Majestic12's picture

"~ Old Ghandi Proverb"

Mahatma, or Indira?

Bruce Gender's picture

Good day sir,

 

At the request of my business partner, we would like to form an alliance with your enterprise. Do you accept Western Union?

 

Please send address and social security number to NigerianPrince@aol.com

 

Very truly yours,

Akeem Joffers

Hippocratic Oaf's picture

All your gold is belong to us.

Please offer your lazy metal for fiat paper today.

Hurry, limited time only please.

Oh, and we know where you live.

Raymond_K._Hessel's picture
Raymond_K._Hessel (not verified) Pladizow Oct 26, 2015 1:51 PM

good god, man, have you never been to an Indian restaurant?

hedgeless_horseman's picture

 

 

To leave gold lying as dead money is behaviour not in sync with the modern times," he said.

Fuck modern times.


knukles's picture

See see see ... they shoulda introduced the antithesis of gold and modern times in Common Core centuries ago and we'd have none of this bull-shit.

messymerry's picture

Yup, barbarous relic.  BAH HUMBUG!  <<<  Getting in the Christmas spirit early...  ;-D    

SoilMyselfRotten's picture

 To leave gold lying as dead money is behaviour not in sync with the modern times," he said.

 

Yeah, you mean like terrorist behaivior? F*#kwads

Herd Redirection Committee's picture

Dead money, I guess he means cash and physical precious metals?

Notice how anything that limits the power of bankstas is now a society-wide 'threat'?

I joke with people at stores if they still accept cash.  I tell them "Will you accept [green] paper?"

Cashless society = Mark of the Beast = total control for the sociopathic fascists in charge

GeezerGeek's picture

Once the US debt passed $1 trillion I used to joke with bank tellers. I'd point to the sign saying the deposits were insured by the full faith and credit of the US/FDIC. I would point out that an organization $1 trillion in debt did not warrant my having any faith in them. Next time you want to use cash, ask if they accept green paper issued by an organization nearly $20 trillion in debt. I wonder if their eyes will just glaze over.

NYPoke's picture

What he failed to say, "The more Gold the Government gets; the more Inflation soars.  The Poor & Middle Class are screwed."

 

I doubt he is smart enough to understand, but he still wouldn't be able to speak the truth...and keep his job.

Expat and Happy's picture

Sure, and all good citizens should hand over to the government, in addition to their "ïdle gold", their "dormant guns", too....oh, and their "unpatriotic children"....

hedgeless_horseman's picture

 

 

Don't forget the, "dangerous books."

“The books are to remind us what asses and fool we are. They're Caeser's praetorian guard, whispering as the parade roars down the avenue, "Remember, Caeser, thou art mortal." Most of us can't rush around, talking to everyone, know all the cities of the world, we haven't time, money or that many friends. The things you're looking for, Montag, are in the world, but the only way the average chap will ever see ninety-nine per cent of them is in a book. Don't ask for guarantees. And don't look to be saved in any one thing, person, machine, or library. Do your own bit of saving, and if you drown, at least die knowing you were headed for shore.”

 

? Ray Bradbury, Fahrenheit 451

Ignatius's picture

Clear indication that gold might be something other and greater than a "pet rock".

ForWhomTheTollBuilds's picture

To leave gold lying as dead money is behaviour not in sync with the modern times," he said.

 

I thought refering to gold as money was supposed to be the mark of the economic illiterate.

 

Funny how the terms of debate shift without anyone stopping to ask themselves who has been right all along.

Herd Redirection Committee's picture

Yep, some serious shifting of the gold, uh, I mean goal posts.  And we are all just supposed to say "My, how smart these experts are, telling me how I can put my gold to better use!"

Better, for who?

ForWhomTheTollBuilds's picture

At least in the west we probably wont have to hear this from our experts.  

 

Since no one statistically speaking in North America owns any bullion gold, the experts can say nothing and eventually jump straight ahead to, "the 1% who own gold are responsible for eveything bad that happened to you, so turn in those neighbours you suspect of having gold"

Four chan's picture

it would be a kick if the rupee became the reserve currency beating china to the punch. they have the gold.

RaceToTheBottom's picture

SDR based on a % of each.  Gotta share the manipulation around so all can "benefit"

AMPALANCE's picture

Your gold is no good, so we'll take it off your hands, because who needs gold?

booboo's picture

My gold is never "idle". It dances at night, the indian is chasing the buffalo while I sleep

messymerry's picture

I dream of incuse designs...

;-D  

knukles's picture

Like citizens holding gold makes for bad economics...  Oh fuckin' yeah, dwarfs fiscal and monetary policies.  And regulations. 
Assholes.
Cries like this are desperation .... another faux enemy, a straw-man like Eurasia, thank you very much, Winston.  Off to Room 101 and the rats for you!
At this rate the PTB really are going to have to contemplate some form of (faux) disclosure a la Paul Krugman about aliens invading Earth
                                          Attention attention!  Alien slime clean up in Los Angeles!