Unofficially India imported about 25 tonnes in February, as buyers waited to see if the Government would reduce the 10% import duty imposed by the previous Government in July 2013. But Bloomberg is reporting that “snap-back” demand could boost India’s imports to 100 tonnes in March as India heads into another festival season – Bloomberg link.
As John Brimelow of JB’s Gold Jottings avers:
India in November demonstrated an ability to import prodigious quantities of gold legally even with duty at an effective 10.3%. This could happen again with weak world gold or, just as possible, a strong rupee. For the immediate future the question is if Indian demand really was inhibited by the prospect of lower duty…
That last sentence references the fact that including smuggled gold, it’s not clear if the 10% import duty actually reduced the amount of gold that entered India either officially or “unofficially.” Of course, the World Gold Council will only use the official numbers and will completely disregard any reference to smuggled gold.
Meanwhile India announced plans to try and monetize India’s gold stock by introducing gold deposit accounts that would pay interest on gold deposited into the accounts and by introducing a “sovereign gold bond” which would be gold-backed bonds that pay interest and would be redeemable in cash. It’s my view that this “monetization” scheme will be fail miserably, as Indians – more than any other culture – demand gold that is delivered to their possession in the form of coins and jewelry.
I really can’t figure out the motive of the Indian Government in introducing this “monetization” idea other than, despite being a BRICS member, India’s Government occasionally plays the role of a lap-dog to the U.S. and England. The Bank of England and the Fed have been aggressively pushing a fractional gold system on India for quite some now. Clearly the west desperate to divert as much global capital as possible away from buying deliverable physical gold and into paper gold derivatives. This plan in India will be a colossal failure.