Is This The Reason Why Gold Prices Are Plunging?

Tyler Durden's picture

While the optics of a soaring stock market and crashing safe-havens (gold and bonds) fits nicely with the election of Donald Trump as the next US president, a closer look shows gold prices beginning to break hours earlier. As India unleashed its demonetization scheme, local retail gold prices began to surge as rumors began to spread of an Indian gold import ban. As rumors have continued, precious metals prices have plunged as the 700 tons of gold imports to India would be a major demand shock for the bullion market.

As MarketWatch reports, back in August 1971, President Nixon shocked the world by taking the dollar off the gold standard. The dollar had been on gold standard since Bretton Woods Agreement of 1944. The biggest bombshell for gold investors in 45 years since Nixon announcement may be ahead. That bombshell is a potential ban on import of gold into India. If this happens, there is a high probability of a one-day drop in gold that could reach $200.

The chart shows how Modi selling overcame Trump buying...


And kept going as rumors of an Indian gold import ban increased...

As a reminder, India’s Modi has directed that 500 and 1000 rupee notes be banned. These notes represent 20% of the cash value in circulation and 80% of cash outstanding. MarketWatch's Nigam Arora explains...

To understand the heavy gold selling from India on Modi's move, one has to understand the underground economy in India that runs on black money.


Estimates have been that the underground economy in India is about 20% to 25% of the total economy; the point is that it is very large.


The most common method to convert black money into white money over the past 50 years has been to slowly buy gold by paying cash using large bills. Converting black money into white money has been a major source of demand for physical gold. Now that large bills used to buy gold are worthless, demand for physical gold will decline.

Indian imports are a huge deal...

On average, India imports about 700 tons of gold each year.


This is an enormous quantity. An abrupt reduction in demand of this magnitude, if there is a ban on Indian imports, will be a major shock to the gold market.

As The Arora Reports notes, even though the media in much of the Western world is mostly still oblivious to this major potential development ahead, they now feel comfortable publishing this for three reasons...

First, the premium on gold being sold in India has jumped to $12 per ounce, the highest premium since November 2014. We see this jump in premium as tangible proof that the rumor is taking hold and affecting gold price.

Second, Indian Bullion & Jewellers Association has informed its members that they are hearing from certain circles of a potential ban on gold imports. Subsequent to our earlier information, this has now become public.

Third, social media in Asia is abuzz with these rumors.

At this time, it is very important for gold investors to stay plugged into sources knowledgeable about gold in India and be alert to any further signs that an import ban may be in the offing. Investors should review their precious-metal holdings to make sure they are comfortable just in case there is a big downdraft.

*  *  *

One can't help but wonder if efforts to block 'black money' being reallocated to gold will not further excerbate capital flight and ironically lead to an export boom as people try to move assets offshore... as opposed to spiking local gold prices (as India's traditional demand meets considerably limited supply). Certainly seems like time to stock up on condoms and lube as smuggling looks set to be the new growth business in Asia.

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daedon's picture

"there is a high probability of a one-day drop in gold that could reach $200."

Assuming we're talking about IOU paper gold, it'll probably go to zero one day,
but not the yellow stuff.

Pinto Currency's picture

Shanghai gold $30/oz premium and silver $1.69/oz premium over London paper market.

But that's actual metal.

cayman's picture

Here's how this plays out; gold goes to $200 and cayman backs up the truck and my friend's truck and a dump truck.

Pinto Currency's picture

Check the London palladium lease rate.
Spiked to almost 5% a few days ago and now at @ 3% up from almost zero for last year
New law needed to force Indian car owners to submit their catalytic converters to the government.

macholatte's picture


convert black money into white money

Even money wants to be white.
Racist money.


Stuck on Zero's picture

Banning gold imports in India will have the same effect as banning drugs for the USA. The demand will go up and the imports will rise.

misalkin's picture

Maybe they will learn something from this lesson. If they moved all cash they had into gold, they would not get problem with delegalized cash. Next time spend ALL the money you have on gold, keeping fiat under bed end badly as they noticed.

dirtscratcher's picture

Not a problem. China and russia will take up the buying slack in a heart beat. In fizz that is. Paper gold is the only downward current nowadays.

SilverDoctors's picture

PM Fund Manager Dave Kranzler concurs...warns "Something REALLY UGLY Is Coming"...

DirkDiggler11's picture

Yea, we were old told that evil SATANIC bitch HELLARY Clinton was coming, and the American people just kicked her ass to the curb. As for PM'/, if something major is about to happen, it has about 4 weeks to do occur. As we move pass Dec 25th PM's will start to move higher..

jmack's picture

lol, if paper gold is at $200, i can get physical at $260....  or less.   I dont agree with this guy's thesis though.  if they ban gold in India, it will probably drive up price. just as nixons move to take us off the gold standard drove up metals prices, when all the economists thought they would drop to industrial demand pricing... peoples love them some gold, more so when governments hate it.

Al Huxley's picture

...even more so when governments destroy the value of their paper savings with a stroke of a pen.

DogeCoin's picture

The pricing of paper gold has nothing to do with what happens in India. It has everything to do with Fed jaw boning and the banks/ESF trying to paint a pretty picture.

bada boom's picture

Exactly.  Stocks at all time highs with manufactured earnings increase by stock buy backs.  This whole thing is a charade to try to get people to spend and/or take out more debt.

GRDguy's picture

But, but the CFTC says there is no manipulation, yet Deutsche dooches pay fines. 

Nothing like feeding a watchdog, when all they do is watch the robbery.

Just like the SEC watched Madoff.  Time to stop feeding them.

Black Helicopterz's picture

You should look into the Madoff case, I think there's a lot more to it than meets the eye. He was a convenient villain when he got taken down just as the financial crisis was taking hold and he wasn't really running a traditional pyramid scheme. In fact, over 1300 of his investors have already been made whole and there is over $4B left to distribute to "victims". He was reported to authorities by his sons after they claimed he admitted the scheme to them over dinner the night before. Very very fishy.

Kaiser Sousa's picture

fucking bankers...ingenius sociopathic morons they r...

they really think this is gonna stop REAL MONEY...

ok, lets just see...


RadioFlyer's picture
RadioFlyer (not verified) Kaiser Sousa Nov 24, 2016 5:32 PM

Maybe its time to change that to:


Triple A's picture

The skyrocketing dollar will be what kills the global economy. Mr. Armstrong has been dead on about gold and the dollar overthe last few years.

FreeShitter's picture

It got to 120 or so before 9/11

katchum's picture

Wow, so I can buy 10 times as much gold each month? Also, if gold is banned, won't Indians buy silver instead?

Lost in translation's picture

I think I'd be searching for RPGs, if I were Indian. They'll need that first.

any_mouse's picture

Nothing like a role playing game to take one's mind off the apocalypse.

East Indian's picture

I am an Indian, and I speak for about a billion of them, when gold import is banned, we will still buy the local stock at probably Rs 8000 per gram. And gold will be smuggled into India. Thats all. 


In the eighties, when gold import was banned in India, and when India used to export much less, and H1B was not there (at least for Indians), in those days, smuggling was estimated to be about 100 tons per year!

You can factor in these above things and decide how much gold will be smuggled into India.

BoNeSxxx's picture

Banning gold imports in India will only increase gold demand there... However the routes it takes into the counrty will change.


I'd buy castor oil futures...



Pasadena Phil's picture

Did India ban the import of physical gold or PAPER gold? I keep getting confused about whether these articles are making any distinction. Just try buying physical gold at a price anywhere near as low as the stated paper price. The pricing mechanism is different for each and we just don't know what the real price for physical gold is. They are not connected.

IMHO, for what it's worth, I believe gold and the long bond sold off because of the shortage of dollars in China and Europe in the face of a sharp strengthening of the dollar. With North America (Saudi America) soon to be net energy exporters, the petrodollar while make a comeback. And the Chinese clam being backed by the collapsing Chinese economy is not making a good case for the clam dethroning the dollar as the world's reserve currency. Nor the SDRs which merely represent a basket of currencies where the dollar is the strongest by far. Those endless predictions by Jim Riclkards notwhithstanding, the dollar is not going to collapse and quickly take out the SDRs to return the world to a gold standard world anytime soon.

The dollar is doing fine and gold will rebound as the countries rebuild their reserves as a hedge against the dollar and in preparation of an eventual return of some role of gold in backing up currencies. 

Snaffew's picture

Russia and China are colluding to make a run at taking the USD from its' throne.  The US has virtually zero physical gold holdings...anything they claim they have is just lead bricks painted with 14k plating.  It is a desperate attempt by the US and Western society to maintain the illusion of strength.  The media machine is in full swing and may casue some more downdrafts in gold, but I'm willing to bet that 6-12 months from now, gold will be substantially higher than todays bargain price.

any_mouse's picture

Chinese, dot Indians, and Russians buy physical gold. Only the shiny.

AlexCharting's picture

I think the gold bear market is over, but dont think it will be an easy escalator ride. 

Lost in translation's picture

Stack 'till yer eyes bleed at these prices, I say.

* EDIT: but first, wait until I tell you that I am buying. Price always goes WAY DOWN the day after I buy... saves you money, tho...

cayman's picture

If it goes to $200, I'm buying with every last cent I have.

Socratic Dog's picture

The article said it could drop $200, not go to $200.

But it also said the premium per ounce has gone as high as $12 in India.

The author needs some grammar lessons, or a better proof reader.

Readers need to learn to read what is actually written.  And critique/run with that, not something they conjured out of thin air.

Badsamm's picture

Sshhhh. They're on a roll

JackT's picture

Ugh! So many rules. No fun

jmack's picture

unless it goes to two hundred on an announcement that they have captured a 15% gold asteroid about half a mile long, i will be making substantial purchases starting at $1000 per ounce and cost averaging all the way down.

any_mouse's picture

"there is a high probability of a one-day drop in gold that could reach $200"

The price may DROP $200 USD in one unspecified day in the future.

What that means is that the USD has gone up in value relative to Au. Less USD buys same Au.

Time to buy Au and sell USD.

Seasmoke's picture

I'm all in on Gold. All in !!! I may lose but it won't be because I am wrong in what is going on in the world. Fuck the manipulators and liars !!!

Kaiser Sousa's picture

thats more like it...

was beginning to worry about u...

stay mad and stay resolute...


FX223's picture

Same here Sea...I have been ALL IN for the last few years and every time I gather a big enough stack of toilet paper dollars I head over to pm shop and grab as much as I can.

I'm not the only one either...


Keep stacking and stashing friends!

DaNuts's picture

Stay away from boats, there have been some terrible accidents.

cowdogg's picture

Who wrote this crap. If Modi banned the import of gold he wouldn't live to see the next morning. Gold is a foundation of Hindu culture and religion and no Indian will tolerate any politician messing with that. It is not too surprising that Western bankers would spread such rumors to pump their Dollar. After all they have a new President to take down.

jmack's picture

Cowdogg two months ago:  "Who wrote this crap. If Modi banned 500 and 1000 rupee notes, he wouldnt live to see the next morning.  High denomination notes is a foundation of Indian cash based commerce and economy and no Indian will tolerate any politician messing with that....".

East Indian's picture

"Gold is a foundation of Hindu culture and religion"


Because we have seen many, many Modis who messed with our savings.

radbug's picture

Capital controls are next. 

Badsamm's picture

When does the shooting start?

AE911Truth's picture


Capital controls on zcash?  H’mm, .. .. .. more popcorn, please.


Clara Tardis's picture

Watching my account the past 2 months, I have to resist harrydentatosis and stay optimistic...

I am, however not including any red for my Christmas decorating, as I've seen quite enough.

g'kar's picture

Global CB's and their license to print going for the jugular but will end up biting a hemorrhoid