India's Jewellers End Gold Strike As Government Caves On Excise Duty: Pent Up Gold Demand To Be Unleashed

Tyler Durden's picture

A month ago, after causing a spike in cotton prices following the imposition of an export ban, India promptly overturned said surprising move following a surge in protest from not only various trade local groups, but more importantly China, whose already razor thin margins would become negative if input costs soared even further. The whole process lasted about 72 hours from beginning to end. Days after, desperate to fund ongoing budget shortfalls, the government shifted its attention to price controls in a market it knew China would absolutely not mind to having the price kept artificially low - gold. What happened then was an announcement by the government to impose to levy an excise duty on unbranded jewelry. The response was swift - a countrywide strike among India's jewellers who all went dark, crippling demand from one of the traditionally strongest gold markets in the world. And all this happening at a time when the wedding season is at its peak, with Akshaya Tritiya, one of the biggest gold buying festivals later in the month, making the period crucial for jewellers. As of hours ago, the Indian finance ministry has caved, and while it took three days to end the cotton export ban, it took three weeks to end the excise duty proposal, India's Finance Minister Pranab Mukherjee said that the government would consider scrapping a budget proposal to levy an excise duty on unbranded jewellery. The result will be three weeks of pent up demand for precious metals being unleashed suddenly, likely pushing spot gold far higher, to where it would be had this latest artificial price control never been established.

More from Reuters:

"The strike has been called off today onwards. We will be starting our shops from tomorrow," said Kumar Jain, vice chairman of the Mumbai Jewellers Association.


Jain said the strike would resume on May 11 if the tax rollback does not materialise.


The strike was staged to protest against an excise levy on unbranded jewellery of 0.3 percent, and a tax collected at source on transactions worth more than 200,000 rupees. The annual budget also doubled import duty on gold to 4 percent.


The moves were game-changers for the $200 billion a year jewellery industry and experts had predicted they could cut gold imports by a third to 655 tonnes in 2012, allowing China to overtake India as the biggest gold importer.


The strike by jewellers resulted in a loss of 200 billion rupees, according to industry officials.

That is not quite correct: the loss will now become a disproportionate profit, as demand for gold, which never really left, but merely could not be satisfied, comes back with a vengeance. Think cash for clunkers inverted. The other impact will be a surge in gold imports, which in turn pushes demand for any kind of gold, paper and physical, rapidly higher.

Keep an eye on gold futures when they open for trading later this afternoon.

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LetThemEatRand's picture

I wonder what all the anti-organized labor types here will do with the fact that a collective worker strike had a positive effect on Gold and free market demand/pricing.  Isn't that like matter and anti-matter coming together?  Sure doesn't fit into the black and white ideological mold very well.

CH1's picture

Binary politics is brain poison.

Cadavre's picture

Read an article making the case for gold price manipulation from 2000. through 2012

Buy and hold physical gold increased about 7 fold (or so).

But, a short futures position, opened at NYSE open, and then closed at NYSE close, netted a 1500% return.

Guessing Indians should have been acquiring gold at, or before, NYSE close. India does weird stuff  sometimes - so it seems - they buy bulk gold at market (haven't they heard of the "darkpool")!


Colombian Gringo's picture

I read the same paper and it seems to ring true. The paper games played in NY and COMEX have screwed many an investor, and nary a regulator in sight.  After MF Global, however,  with blatant corruption and fraud staring us in the face, the marks are leaving what is obviously a rigged game. The Banksters overplayed their hand, funds are draining out of the CRIMEX and into international exchanges where they have less control.

Two years from now, I have no doubt that my physical will be worth more in USD.

Straying from the flock's picture

Well put.  I am glad to see that more are awake and trying to spread the word.  One of the main issues is that we were born into slavery and debt bondage.  Manipulation is just the word now being used to codify what has been hapening to us all along.

It is the normalcy bias that keeps us from standing up for ourselves.  Separate yourself from the herd.  Soon there will be a new paradigm and those not aware will be fodder for the masses.  People do many odd things when you take away their future.

qqqqtrader's picture

Gold Silver Chart - YoY Performance


+1 keep posting charts

-1 stop posting charts

jomama's picture

i'm feeling a lot better about recently dumping the paper i could into metal (again).  thanks for the great charts, as always!

Cultural Capital's picture

I love it how the gold bugs don't have faith in ETF's yet think a gold 'backed' currency is the solution. They don't have faith in government while it pumps out fiat, yet believe that somehow a 'goldstandard' will end the manipluation madness/gangsterism lulz.  Dreams are free= lulz. 

CH1's picture

Doesn't sound like the "gold bugs" I know.

DoChenRollingBearing's picture

Completely agree.  FOFOA for example has a completely different take...

Oh regional Indian's picture

Well DCRB, more and more FOFOA seems to be a shill-ing. ;-) 

GOld is looking mighty skittish to me.



DoChenRollingBearing's picture


Hey I like gold OK?  I only shill my blog...  But, I have nothing to sell there, you can't even donate!

NewThor's picture

As much as I love Zerohedge.

some of the people here are too in love with

their gold.

Sure. Gold and Silver are the only 'sound' money on the planet, but in an economic collapse situation gold can bring you just as much trouble as it can bring you wealth.

I continue to recommend building a good strong team of people around you for the coming events of 2012.


Dapper Dan's picture

I continue to recommend building a good strong team of GOLD people around you for the coming events of 2012.


NewThor's picture

It's not wise to make


the new Currency


the new Religion.

Study history and mythology

if yee seeks the truth

on this matter,

or for the 'Curse of Goldlust' quick lesson,



Me and my posse don't need no stinking badges,

but we wear them because it gives us

+100 to charisma, bitchez.



silverdragon's picture

New Thor,

Agreed lots of Silver, some Gold and a few good businesses whose fortune you can directly and positively impact through hard work and smart decision all providing cash flow.

Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Correct. It's less the what and more The Who.

the 300000000th percent's picture

Maybe we need to let there be competitive currencies on the free market and give the government a run for their money, pun intended. Insted of a Government controlled "gold backed" currency which none of us can be sure any gold is backing it. 

NewThor's picture





Reset Button.

IAmNotMark's picture

I love it how the anti-gold bugs seem to be so closed-minded.  They don't know why some people have a different opinion and philosophy about life and are reduced to displaying their ignorance by critisizing something that they really don't understand.


jomama's picture

categorically lumping all gold bugs into one-in-the-same lot, all who want a gold-backed currency, is disingenuous.  what you seem to be twisting around to suit your viewpoint is that most gold bugs disavow the current, heavily manipulated fiat paradigm.

a currency that would have a the longest longevity would be a basket of global currencies and commodities, for the most stable value, and least susceptibility to manipulation.


Uchtdorf's picture

Yep, it's called a strawman argument and it's getting very boring.

Those who use such paltry weapons can't demonstrate a single incident when a fiat currency worked out for the benefit of the masses. 

tmosley's picture

Free banking is the best answer.  Multiple private institutions issue gold backed currency, or unbacked currency (or any other form of currency) if the market demands it.  They compete with each other, and redeem each other's currency, just like they did during Scottish Free Banking.  People can transact in specie if they don't want to participate in that system.

Simple.  Free.  Resilient.  No wonder these idiot partisans hate it so much they feel the need to tell lies about anyone even vaguely associated with the idea.

StychoKiller's picture

Ya can't print Gold, and Banksters do fractional reserve lending (<100%) at their own peril!  Sorry, but FRNs and other Fiat Munny is easily made into a dishonest system.

tmosley's picture

Any kind of money is fine, so long as all parties know in advance what they are dealing with, and they get a choice.

I, for one, would be quite happy to deposit my silver into a free banking system bank that uses fractional reserve lending, for the right amount of interest, especially if they are an institution that takes very little risk with their lending.

Fractional reserve lending is fine, but only if the depositor knows what he is getting into.  There should also be a clause in the contract providing for denial of deposit redemption requests for a certain period of time (generally a year) with a higher rate of interest paid to the depositor by the institution during that time.  Of course, other banks will often buy out the depositors of that bank, sometimes for a fraction of face value, but generally at face value, and use that as leverage to put the sub-par bank out of business.  Fear of just this sort of thing happening is what made Scottish Free Banking so resilient, with few if any bank runs during that time period.

Mr Lennon Hendrix's picture

I rather think America's black and white ideology is alive and well.

Venerability's picture


I am thrilled you made that comment! because I can re-post here what I just said on a thread elsewhere, where a poster named "GlocksandGold" was aiming to be pro-Gold but anti-Paul Krugman and his Stimulus stance:


You are being blinded by your biases, if you are actually a long-term Gold Bull.

The very best thing for the Gold sector is for Progressives to embrace Gold as avidly as Libertarians have.

If we could somehow "convert" Dr. Krugman, it would be THE coup of the Millennium for Gold Bulls.

And that depends on Gold sector veterans ceasing and desisting with the Gold Against Stocks or Gold Against Any Particular Currency - which are highly INaccurate in this Post Dow Theory environment and Post Dow Theory WORLD!

We need to convince Dr. Krugman and others like him that Gold now represents GROWTH and Fairness and Market Neutrality - which it does.

Gold represents the end of the World's Monetary Reserves being dominated by any one Empire Currency and coming to reflect a Conservative AND Progressive fair and neutral balance of currencies based on the increasing, not decreasing, inter-relatedness of the World Economy and World Trade.

And Gold directly reflects the inexorable rise of a viable bourgeosie - a consuming middle class - in that one-half of the planet which has not had one before.

That one-half of the planet corresponds very, very closely with those parts of this earth which have been Gold-loving and Gold-covetous since the days of the earliest hominids: China, India, the rest of Asia, the Middle East, Africa, and Latin America.

Telling this one-half of the planet that "Your culture is simply wrong, and ours is right" leads to horrors like the Chinese teenager who just sold his kidney for an I-Pad!

For the US and UK to tell this one-half of the planet that Gold is somehow a "barbaric relic," while thousand dollar pieces of cloth from Michael Kors, 6 dollar coffee drinks from Starbucks, 200 dollar sneakers, 150 dollar yoga outfits, 300,000 dollar sports cars, 50,000 square feet mansions in Greenwich or San Marino . . . etcetera to the etcetera-Nth . . . are "good" and "civilized" . . . Does one wonder why most people on this planet find the American Empire, based on pure silliness and lack of respect for every other country, WORSE, not better, than those previous Empires, which at least openly proclaimed their agendas, based on . . . Well, stealing resources, the agenda for all Empires at their root.

Since Dr. Krugman and Rich Trumka and everyone else in the Progressive camp DOES understand why Emperor Dollah! Dollah! Dollah! is Bad! Bad! Bad! - why is it so difficult for them to take the next philosophical leap and understand that Gold, the Stateless Currency, the Mediating Currency, and an important Counter to Cultural Imperialism is Good! Good! Good! for continued Progress on this Planet?

LetThemEatRand's picture

What about my post suggested I am anti-gold?  I would love to see the TBTF private banks stripped of their power to create fiat.

But you lost me with this one:  "Telling this one-half of the planet that "Your culture is simply wrong, and ours is right" leads to horrors like the Chinese teenager who just sold his kidney for an I-Pad!"

I think that is just blind consumerism.  People will want stuff whether it's priced in paper or PMs.  If a kid sold his kidney for monster box of silver, would you blame silver?

NewThor's picture

The only way to 'covert'  Dr. Paul Krugman is to pay him more money than Bernanke and Geithner are doing.

Do you have a fleet of digital printing presses on your iphone?

Didn't think so.


waste NO time on the thought, yo.

WAMO556's picture

Venerability - I give you a +1 UP GREEN ARROW - for a good write that makes one go "hmmmmmm" - it is not often, that someone can do this, and I like my targets substantial so that they may know what is coming. Thank you, please continue.

Temporalist's picture

"We" don't need to do anything but continue doing what we believe in. "They" will continue their manipulations and it will eventually collapse like every ponzi.


Krugman is a laughing stock and his own peers don't listen to him any longer only morons like Bill Maher still quote him or read his articles.


All the rest you wrote is noise.


Gold is already a currency it is quite obvious to any but the lying central banksters and their media propagandist whores who, if they believe their own bullshit, are woefully unprepared.


The dollar is collapsing under its own hegemonic weight and even dense observers with the greenest dollar colored glasses on can see the headlines that have been appearing with much more frequency over the past several years about the emerging countries tiring of the US and its petrodollar, as well as gold having a place in global finance (e.g. Robert Zoellick).


The propaganda has increased ten-fold in the past year alone.  Even the pleebs are aware of the media bias and they are tuning off the propaganda news grinder for alternate sources (as evidenced by many "News" stations losing viewers).


Time and pressure...

NewThor's picture

All fiat currency does is convert human time into paper money so the price of the human time can continue to be driven down.

depreciating paper money time + over population = Earth is a chinese Walmart

NewWorldOrange's picture

chinese Walmart? is there any other kind?

swanpoint's picture

do me ... And FUCK Krugman!

The Alarmist's picture

"I wonder what all the anti-organized labor types here will do with the fact that a collective worker strike had a positive effect ..."

It was hardly a collective workers strike. It was a collective merchants/taxpayer/employers strike, so it was harmonious to say the least with the natural order of greed.

tmosley's picture

Organizing against government aggression is ALWAYS good.

Organizing against private aggression is ALSO good.  This is what Unions in the US USED to do.

Organizing FOR government aggression is ALWAYS bad.  This is what unions in the US NOW do.

The fact that you are an idiot continues to reassert itself.

LetThemEatRand's picture

Totally lost on you is the concept that our government is supposed to be first and foremost for the people and by the people.  Your precious "productive class" of oligarchs have taken government over, and you blame government. Perhaps you've forgotten that during the industrial revolution unions were met with violence from private employers.   Government laws and force made it possible to unionize.  So when you talk about unions organizing for government aggression, you naturally include the concept of unions voting for politicians that will maintain their right to organize against private oppression and violence which history has proven will exist absent government push back.  Why is private oppression always a missing component of your thought process? 

Max Fischer's picture



Did you know that tmosley's research is partially funded by the government, and that he spends quite a lot of time applying for government grants?


Another anti-government hypocrite.

Max Fischer, Civis Mundi

LetThemEatRand's picture

No shit.  Why am I not surprised?

Max Fischer's picture



Some time ago, he also admitted to writing science grants for the government in his particular field.  This is a guy who routinely applies for government money and then helps shill for them, too.  

Then, he logs onto the internet and goes to various websites ranting against the government and how worthless it is.

Imagine the cognitive dissonance!

Max Fischer, Civis Mundi 


LetThemEatRand's picture

This is actually par for the course for literally every person I have ever met who identified with Ayn Rand.  It is a "do as I say, not as I do" crowd.  For example, I know a woman who went to public school from K through graduate school, and who -- after becoming a small business owner -- now wants to deprive the rest of humanity of her opportunities.  She cloaks herself in Rand's ideology and claims it would be better to do away with government funded school.  But in reality she simply doesn't want to pay taxes.   I understand selfishness and narcissism, but it drives me crazy that these people always try to say it is something more than that.  

DosZap's picture

and claims it would be better to do away with government funded school.  But in reality she simply doesn't want to pay taxes.


I disagree, I think she, like most of us(esp the younger ones here), relaize the Public schools are nothing but brainwashing camps.She went through them, and succeeded on her own merits and desires.

This is a dead on 100% certainty w/the  State colleges..............finding a conservative Prof in one today is nearly impossible.

As far as taxes go, why should folks living in a home, or renting with ZERO kids have to pay for other folks kids?.

I know a LOT of Home Schooled kids, when they head out to institutes of higher learning, they are usually 2yrs ahead of their public school educated peers.

LetThemEatRand's picture

I know, facts like the success of the publicly educated person I described are so inconvenient.  Back to theory and platitudes.

tmosley's picture

Force everyone to be publicly schooled, claim that all of their successes are a result of public schooling.


WmMcK's picture

As far as taxes go, why should folks living in a home, or renting with ZERO kids have to pay for other folks kids?

Maybe they shouldn't as long as they don't expect to be supported in the future (by Social Security, Medicare etc).