Indian Gold Premiums Explode After Nation's Biggest Gold Importer Suspends Bullion Dealers Accounts

Tyler Durden's picture

Following news last week of a surge in Chinese retail gold premiums as demand for physical bullion soars amid China capital controls, Reuters reports that the chaos in India has sent people rushing to buy gold, paying as much as a 50 percent premium above official India prices. This renewed surge in demand for physical in india follows reports that India's top importer of gold, Axis Bank, reportedly suspending the bank accounts of some bullion dealers and jewelers following the arrest of some executives over money laundering.

 

Last week saw news of reported gold import curbs in China (and looming capital controls) has sent gold premiums in China near three-year highs amid limited supply of the precious metal (as Reuters reports)...

The import curbs may be part of China's efforts to limit outflows of the yuan after the currency's slide to its weakest in more than eight years, traders say. China allows only 15 banks to import gold, including three foreign lenders.

 

"There is severe restriction on the banks' quota to import gold into China. Each one of them have to justify their need," a Hong Kong-based banker said.

 

Gold was sold in China at about $24 an ounce above the international spot benchmark this week. Premiums went as high as $30 last week, the most since January 2014, according to Thomson Reuters data.

 

 

"Supply has been limited and so the premiums have held firm," said Cameron Alexander, analyst with Thomson Reuters-owned metals consultancy GFMS.

And now, as Reuters reports, concerns are growing in India that import curbs or outright confiscation may be coming...

Axis Bank Ltd, India's top importer of gold, has suspended the bank accounts of some bullion dealers and jewellers after two of its executives at a branch were arrested over alleged money laundering.

 

"We have temporarily suspended transactions in a few current accounts as a part of a larger enhanced due diligence exercise being conducted on transactions post-demonetisation," the bank said in an e-mailed reply to questions from Reuters.

 

Axis did not directly comment on the arrests. Last week the Enforcement Directorate, a government agency that fights financial crime, said it had arrested two Axis bank employees for allegedly helping launderers to buy gold with the help of scrapped notes.

 

The bank said the suspended gold dealers' accounts will be restored over the next few days after an "enhanced due diligence process".

 

A Chennai-based bullion dealer, who declined to be named, said the bank had frozen his account without giving a reason. Half a dozen other dealers in Kolkata, Mumbai, Ahmadabad and New Delhi also confirmed the freezing of their Axis accounts.

 

The move has brought bullion trading to a standstill, with jewellers fearing attention from government agencies if they make large purchases, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

The move is likely to curtail imports by the world's second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.

In November the country's gold imports jumped to around 100 tonnes, the highest in 11 months.

 

Jewellers and bullion dealers are deferring purchases and gold imports in December could fall to 30 tonnes, down from 107 tones in the same month a year ago, said a Mumbai-based dealer.

 

It is estimated that one-third of India's annual demand of around 800 tonnes is paid for in "black money" - the local term for untaxed funds held in cash by citizens that do not appear in any official accounts.

And this has sparked a surge in physical demand (amid limited supply concerns)... (as Reuters reports)

There have also been reports of people rushing to buy gold by paying as much as a 50 percent premium above official prices using their unaccounted money to skirt the note ban.

And as we noted previously, it's not just Asia.

In the US, physical gold demand has soared post-election in The United States as the paper prices were pummeled...

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besnook's picture

but, but but, gold is trading at 1160 and dropping. no one wants gold. everything is great. the world has been fixed.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) besnook Dec 12, 2016 9:44 PM

but, but, but Zerobrains told me that Gold can't be banned and if it does get banned then you should turn it in?

And all "the elite" have to do is turn off gold and its worthless.

in4mayshun's picture

Hey! Where's all the idiots forecasting $800 gold?

Mungo9000's picture

We may find he commited suicide by shooting himself twice in the back of the head.

MalteseFalcon's picture

"people rushing to buy gold by paying as much as a 50 percent premium above official prices".

If people are paying 50% above the official price of gold, just what is the "price" of gold?

How is  the "official" price determined?

If there is a concerted effort to stop gold importation by the world's two biggest markets, what's coming next?

38BWD22's picture

 

 

+/- $783

BTC has had a good run.

HungryPorkChop's picture

The globalists must be having convulsions right now.  This was not supposed to happen. 

Mustafa Kemal's picture

"And all "the elite" have to do is turn off gold and its worthless."

How does that work actually?

SILVERGEDDON's picture

AHH HAA HAA HAA HOO HOO HEE HEE ! 

Turn off gold.

That's hilarious.

It ain't a light bulb, dip shit.

Try offering people an electronic sheep Bitcoin, or a Liberty $20.00 gold piece to pay for a transaction.

Guess which one anyone world wide will prefer ?

For all real life transactions, gold before all. 

Regardless of a dumb assed government thinks they can do about it.

 

Perimetr's picture

8000 tons of "paper" gold contracts were sold in the 3-4 days following the election of Trump

this amount is equivalent to 3 years global production, and about equal to the total US gold reserves supposedly held in Fort Knox (no audit allowed since 1956).

And . . .another 8000 or so tons of paper gold contracts has been dumped in the COMEX market since then, all in order to hold the price down.

It's not going to work much longer . . . .

sinbad2's picture

It's getting very expensive.

Last time the US did this it ended up selling all its gold reserves, but it took 10 years to exhaust the gold supply.

Last time it was the Nixon shock, I wonder if they will call it the Trump shock?

One thing is for sure, they won't let the dollar collapse until Obama is gone, if they can help it.

Raffie's picture

So how do I get my gold over there to 'help' out the gold shortage?

By stopping GOLD from being imported we will see the price explode maybe in a big way.

CheapBastard's picture

If China pulls the same thing prices/premiums will skyrocket. My friend there said he loaded up because there will be a very brisk black market.

Raffie's picture

BLACK MARTKET!! THAT IS RACIST!

Ok, found my safe space and now untriggering.  8-)  

 

Getting PM from America to other countries is hard, especially on a plane.

Ms No's picture

I don't understand this modern black market.  Is that where you meet a guy in alley and hope that he doesn't bust your skull and take your loot?  Is it a dark net thing?  Or just an off the record thing?  Or a barter thing?

It sounds like a pain in the ass wherever it is.

 

flaminratzazz's picture

I looked for it.. but I think it is nocturnal.

Raffie's picture

Albinos are not welcome either.

sinbad2's picture

No it's where you sell to a trader who gives you cash, and no receipt.

There would be a lot of gold traders in New York who would ask no questions pay cash and lose the paperwork, if the price was right.

Implied Violins's picture

I went to Russia in 2005/6 and saw the underground black market in St. Petersburg. It was unreal...actual underground subway walkways where people had bathroom stall-sized booths built into the sides using chicken wire where they sold pirated videos and CD's etc. I got one of those cool mink-lined fur Russian hats (or whatever species they used) and some verrryyy tasty black caviar. Never felt unsafe, though I did see some gypsies rough up some poor dude and steal his shit.

Here in 'Murika, when the SHTF, I think things will be sketchy...too many guns. I see feudalism in our future, unfortunately. As you say, it could be a definite pain in the ass here...

East Indian's picture

I see feudalism in our future

 

Me, too. And I want to stop that.

sinbad2's picture

And China is the biggest gold producer in the world, and they don't export any of it.

China's gold reserves must be at least 10 thousand tons, probably 20 thousand.

daveO's picture

The Chinese gov. likes to imprison/execute people. If they impose an import ban on gold to prop up yuan, then look out below! Harry Dent will get to see his $700/oz. prediction.

HenryKissingerChurchill's picture

My friend there said he loaded up because there will be a very brisk black market.

black market a.k.a. FREEDOM market

stacking12321's picture

in other news, gold price drops below 1.5 BTC per oz

Justin Case's picture

I am not sure its would make sense because there is powerful demand for physical in the East (India went to USD $3000). When you stop incoming supply which way internally does any item move? In India gold went to USD $3000 on a lesser event.

In China, I would say blockage of gold imports and gold internally goes to USD $5000 there. In the paper market the gold disappears in price, but to what purpose other than one hell of of black market arbitrage. You would have a USD $4090 difference between western paper gold markets and eastern physical gold markets. No power on Earth would stop that arbitrage.

Theta_Burn's picture

Insanity across the board..

Record demand for PM's but the price falls.

Its the Russians fault..we know this for a fact.. we just can't share those facts with you dear citizens..

Hillary has proven that the cockroach pesticide formula really does need to be changed every few yrs.

I was mistaken... John Boltan is certifiably insane..

 

 

 

 

SHEEPFUKKER's picture

Trying to take Indians gold away is like trying to take Americans' fast food and i-gadgets away. 

CheapBastard's picture

Like taking cheese away from a Swiss...or...

Wine away from a Frog...or...

The Goat away from a Saudi.....

flaminratzazz's picture

or a sheep from a montana cowboy

 

or should i say ..montaaana

Placerville's picture

Like Hockey away from Canada

Pearl Harbor and beer away from the Germans.

Godzilla away from Japan.

Bunga Bunga's picture

Like taking iPhones away from Apple fan boys.

Black Helicopterz's picture

Biden away from little kids.

Obama away from trannies.

Trump's (large) hand away from pussy.

Ms No's picture

I hope they cannibalize the bastards by noon tomorrow.

 

Kagemusho's picture

How long before the Chinese SGE breaks with the LBMA to feed the Hindu demand for gold? The arbitrage is already at 30 dollars. http://didthesystemcollapse.com/

Shed Boy's picture

Fake news. Gold is down. A buying frenzy would have spiked Gold. Last night it went down to $1060. This just a propaganda piece, click bait for the ill informed.

Theta_Burn's picture

So that US gold sales/price chart is fake?

 

Shed Boy's picture

Probably. See any reference of whose data it is? Without a refence the author of the article probaly made it to support his article. Besides, this article is about the premium price being charged in India, not how much bullion the US mint sells. Why not post a graph of how many Canadian Maples have sold...or Gold Pandas?

Fake news.

38BWD22's picture

 

 

Current price is $1164, not +/- $1060....

sinbad2's picture

Correct, soon to be 116,400, but in US dollars. I don't expect the AU dollar to fall by anywhere as much as the US dollar, but the price will still probably double in AU dollar terms.