India Folds On Gold Excise Tax: Indian Gold Restocking Imminent

Tyler Durden's picture

Back in March India did a quick flipflop on its then announced Cotton export ban following complaints by China and domestic trade groups, which created quite a stir in the cotton market, first sending it soaring then plunging on supply concerns. This was promptly followed by another misguided attempt to control and benefit from the price of a key commodity, in this case gold, when the country announced it would impose an excise tax on gold jewelry, sending its gold merchants into a nationwide strike. This did not last long either and a few days later, merchants cancelled their strike following promises form the government that too would be promptly overturned. Sure enough, the excise tax has been officially withdrawn, and the biggest source of gold demand is set to see gold imports unleashed once again.

Bloomberg explains:

India, the world s largest bullion importer, has withdrawn the excise duty on precious metals jewelry, Finance Minister Pranab Mukherjee said today.


Jewelers closed stores for three weeks in March in the longest-ever strike, after Mukherjee doubled import levies on gold and imposed a 1 percent excise duty on non-branded ornaments. The stoppage ended on April 6 after the government assured jewelers that their concerns would be considered. The strike cost the industry about 200 billion rupees ($3.9 billion) in lost revenue, according to the All India Gems & Jewellery Trade Federation.


The tax removal may boost demand in India, increasing imports and bolstering global gold prices after they climbed 4.9 percent this year. Bullion is advancing for a 12th year as Europe s debt crisis and concern that global growth is slowing has fueled demand for wealth protection.


The Finance Minister has understood our problems and removed the tax on both branded and unbranded jewelry,  said Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation.


Demand should recover from now and imports will improve as jewelers who had not stocked up earlier will start buying.

How big is Indian demand in perspective? In a word: huge.

In a non-bizarro world more demand would mean higher prices. Alas, we have not been in one of those for the past three years so what more demand means under central planning when met with comparable paper supply is anyone's guess...

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DeltaCharlie's picture

Looks like that meeting with Clinton didn't go down too well then? 

Think for yourself's picture

24k Au, bitchez!

To be fair, if I had an indian bride like those in the adds, I'd do my best to coat her in gold too

Manthong's picture

Wise move.

A step in the direction of future prosperity and security for that nation.

We should pay heed to the thought process behind that.

GetZeeGold's picture



They took the whole Cherokee Nation
And put us on this reservation
Took away our ways of life
The tomahawk and the bowie knife


Oh wait.....wrong Indians.


Pladizow's picture

I like my gold, vindaloo!

francis_sawyer's picture

I'm sure they laughed that bitch right off the peninsula...

Nussi34's picture

Such a fuss about a 1% tax?

TheCanimal's picture

As a true believer, it's hard to continue to buy gold and silver stocks or physical as it continues to erode.

SilverTree's picture

Well, I guess you really are not a true believer then are you?


Physical, nothing more.

Think for yourself's picture

With the energy corp nationalization in Argentina and Bolivia in the the last 2 weeks, I wouldn't wait much before stacking...

Pladizow's picture

Well then you're not a "true believer".

francis_sawyer's picture

Don't tell me you're trying to become 'civilized'!

LawsofPhysics's picture

Then you are not a true beliver.  The truth is gold is not an investment, it is a store of value when times are bad to be purchased when times are good (and gold is cheap).


By low, sell high, not the other way around.  Moreover, it is about a physical store of value, a lifepreserver when every paper promise goes bye-bye.

fonzannoon's picture

Hey LOP you seem to make it very clear in your posts that the time to buy gold seems to have passed. Or am I misunderatanding your point?

LawsofPhysics's picture

I would wait for now.  I see some potential for a cheaper price moving forward as operation twist comes to an end.  ZIRP is a problem for the central banks and the western world.  Something has got to give as commen sense should tell you that there is always a cost associated with creating capital.  Printing is all they have left, period.  The only other option is a massive deflationary spiral that will destroy every central bank on the planet.  It's that or WWIII.  Looking at the history of central planning and fractional reserve banking (now over 100+years) one sees that there really are only two options;  massive inflation or war.  Deflation is never allowed, period.

fonzannoon's picture

Fair enough, and I am not trying to pin you down to making some sort of call. I guess what I am asking you is, for people out there who did not get in when you did, or are not in at you think it is a bad idea for them to be buying at these prices?

LawsofPhysics's picture

"do you think it is a bad idea for them to be buying at these prices?"

That would depend what your expenses and revenues are.  So long as your have the paper, I always favor buying anything of physical value over holding paper in the long run.  Ask yourself "can I afford it" (Duh) then think about this - lose 20-30% during heavy manipulation in gold or lose 80% in paper when the haircuts and sovereign defaults come.  Again I hate paper in these times and like physical assets.  Especially assests that generate their own revenue (of which gold is not one).  I will be buying some more silver at these prices.  I don't see gold coming down too much more and I see the gold silver ratio correcting in 2013 or as soon as the issue of reserve currrency status heats back up.

Comay Mierda's picture

"true believer"

buying gold and silver is not a religion.  its common sense.  do you believe that the sun rises in the east and sets in the west?

better question - do you believe politicians/central banks will stop printing money?

DeltaCharlie's picture

Hear, hear! 

Not gold, buy buying Jerkshire Hathaway is... and Warren Buffet is the Messiah. 


IAmNotMark's picture

I just checked.  My physical isn't eroding at all.

Oh...I get it, you mean the price!  That's not erosion...that's a sale! 

Right now, the price of gold only affects what I pay.  I'm not a seller, I'm a buyer.

Bad Lieutenant's picture

crafty and beautiful post. 

assuming your name is mark, love your username btw.

GMadScientist's picture

Don't worry, you can laugh at them later when you're buying at $1400 in the deflationary spiral and they're out of powder due to their 'early fervor'.

Young bull: Let's run down there a fuck a cow

Old bull: Let's walk down and fuck em all

LawsofPhysics's picture

Considering the dollar-cost average on my gold is under $300, it might be a while.  Like I said, you buy gold when times are good (and gold is cheap).  

If you really think that The Fed and the world's cenral bankers are going to allow a deflationary spiral (without WWIII) that will get gold back under even $1,000 an ounce, I'd say you have bigger mental issues.  Not going to be allowed to happen, period.

While that kind of deflation would be great for savers, retirees, and productive income earners it is bad for TPTB and all of the banks in the world.  Again, look at history, NOT GOING TO BE ALLOWED TO HAPPEN.  Wake the fuck up already.  Think about what would have to happen to interest rates, again not going to happen. (at least not without WWIII).


FYI- the bull quote you are citing implies patience because the older bull takes his time and makes wise investments that pay off many years  later.

GMadScientist's picture

$1640 -> $1400 is only a 15% dip.

You think you're the only person that bought gold in the 90s?!


gmrpeabody's picture

I think the old bull wants to save his energy for the matters at hand.

LawsofPhysics's picture

Yes, plus many old bulls got together and developed viagra, now that was a productive use of capital.

Money 4 Nothing's picture

He sold out at $1180.00 didn't he? Damn shame tart trader.

SeverinSlade's picture

What's changed?  Absolutely nothing.

Will central banks continue to devalue all fiat currencies?  Yes.

Will politicians ever stop running up sovereign debt?  No.

Why the fuck do you care about the price of gold and silver priced in TOILET PAPER?

kill switch's picture

A rare find!!!! You get it..

LULZBank's picture

... trust Gold prices to go down.

LawsofPhysics's picture

Damn that barbarous relic. 

Think for yourself's picture

edited out - if your words wouldn't improve on the silence, keep them for yourself

judejin's picture

silver futures will start trading in shanghai this thursday.

it will probably open high then trend lower throughout the day.

Badabing's picture

"silver futures will start trading in shanghai this thursday"

when they started trading gold it stoped the nightly runup.

Now for 24 hour silver price control, sell that paper and buy that phyisical!

GMadScientist's picture

Woohoo...long Tomaz SA and Malaga!


fredquimby's picture

$1636.20 #gogogadgetgold



Money 4 Nothing's picture

$159x.00 up next. Silver just shit the sheets and dropped to $29.71 and Gold is holding it's perpetual trading range dipping back into it's net -0-  $1635.00 range. Go PM's!

edstar's picture

should be some pent up demand but gold in INR is only 5% off its all time high.

youngman's picture

They also have a lower price which should mean more buying...even though its hard to watch the price of gold go down in these amazing political and fiscal the long term you will be glad you had it when you did...

Todays news about the elections is for me just another 1-2 trillion printed in the EU....more paper floating around..paper less is better

orangegeek's picture

Elliott Wave count on spot gold still shows longer term bearish.

Dr. Engali's picture

Please are you seriously trying to make a longer term wave call on a daily chart? Go back to chart school noob.

Zero Debt's picture

Robert Prechter’s prediction for a massive decline in gold prices comes true

Gold prices fall 90% in one day

Reuters - April 1, 2013

Robert Prechter predicted in 2001, 2003, 2006, 2009, 2011, and most recently in January this year that gold could drop 50 percent from its peak value because of deflation and over-ownership. During that 12 year period, gold prices soared from $265 per ounce to a peak of $5,428 yesterday.

Prechter claimed that his long string of gold price forecasting failures was finally broken today when gold prices fell 90% from $5,428 to $542.80 when the Federal Reserve issued the New American Dollar and accepted previously issued US dollar currency at a ratio of ten to one.

Starting today, for each $1000 of old US currency turned in, a new $100 will be provided and all dollar accounts will reduced by 90%. Holders of old US currency have until April 15 this year to turn in all old currency, after which it will not be redeemable.

Asked if a revaluation of the dollar met his definition of deflation, Prechter stated, “Absolutely. When the price of anything declines 90% in one day, that is a severe deflation.”

Prechter is known for forecasting a big bull market in stocks in 1982 and for getting out before the 1987 stock market crash, and for not making any correct forecasts since then.

GMadScientist's picture

Onion-class satire. Love it!

NotApplicable's picture

I almost quit reading before I hit the punch-line.