Tag Archives: Indian gold imports

Early Monsoon Season Will Boost Indian Gold Buying

After the concerted western Central Bank  effort, led by the BIS, to squelch Indian gold imports by eliminating the most commonly used currency bills failed, the fake news about Indian gold imports coming from the World Gold Council amplified.  The WGC missed its Q1 2017 forecast for Indian gold imports by a country mile, as Indian gold imports doubled in Q1 to 253 tonnes.   Please note that these numbers do not include the amount of gold smuggled into India, which has been estimated to be 200-300 tonnes annually.

Now the World Gold Council is promoting the narrative that Indian gold imports will average only 90 tonnes per quarter the rest of the year because of a new General Sales Tax scheduled to be implemented on July 1st plus restrictions to be implemented on gold dore bar imports.  However, this is again an ill-fated prediction, likely for the purpose of spreading anti-gold propaganda, which seems to be one of the World Gold Council’s general directives.

First, in April and May, the premiums to world gold paid in India suggest that April/May imports already are well into triple-digits.  And the WGC’s arguments are absurd, as expressed by John Brimelow in his Gold Jottings report:

In JBGJ’s opinion the only way this prediction can be right is if the $US price of gold jumps a couple of hundred dollars. Since Q2 is half gone and premiums have if anything been even more constructive during April and May, imports for the quarter are very likely be deep in triple digits also. The dore point is just ridiculous.  To the extent dore is not available India will just revert to buying kilo bars which are only a few dollars more expensive. How the Authorities will treat the gold trade in introducing General Sales Tax is still uncertain. But using it to increase the rate of tax will just increase smuggling. In any case, fear of a tax increase should be stimulation anticipatory buying, a point the WGC avoids mentioning.

In addition to the current elevated level of gold demand in India, the early arrival of monsoon season to India will further boost demand for gold “by setting up India for higher farm output and robust economic growth” (Economic Times).   Farmers use cash from their harvest sales to buy gold, which is one of the major sources of demand fueling India’s biggest seasonal gold-buying period in the fall through year-end.  The bigger the harvest, the more gold bought by Indian farmers.

For the WGC to forecast 90 tonnes per quarter for the rest of 2017, especially given that Q2 is nearly in the bag and is likely already well over 100 tonnes, is nothing short of motivated anti-gold propaganda.  An increase in the General Sales Tax will likely cause a temporary dip in gold imports.  But, as with sudden moves higher in the price of gold, Indians will “get used” to paying a slightly higher price and normal import patterns will resume. Furthermore, a higher rate of taxation on gold sales in India will likely stimulate increased smuggling, over which the Indian authorities seem to limited control.

I appears currently that the western Central Banks are having a difficult time keep a lid on the price of gold.  The elevated level of Privately Negotiated Transactions and Exchange for Physical transactions – both of which facilitate settlement of Comex gold contracts off-exchange, privately and out of sight – is an indicator the banks are struggling to settle gold contracts with deliveries from the amount of gold available on the  Comex.   For now the price of gold has been successfully contained below $1300.  But it would not surprise me if gold makes a strong run over $1300 heading into, in not before, Labor Day weekend.

India’s Gold Demand Gets Rolling – An “Unofficial” Bottom?

Our sales have increased by 30-40 per cent over the last week following a decline in gold prices. Given that the current price level will continue, we see this season as one of the best festive seasons in terms of jewellery sales in recent years,” said Rajesh Mehta, managing director, Rajesh Exports, one of the largest jewellery retailers in India. – LINK, as sourced from John Brimelow’s “Gold Jottings”

I say “unofficial” bottom to this 9-week manipulated take-down in the price of gold because we don’t know to what extent the western Central Banks will throw paper at the NY and London gold “markets.”  But based on the latest Commitment of Traders report, the bullion banks are covering their shorts fairly aggressively while the moronic hedge funds dump their longs and try to chase the market lower by piling in to the short side. This has always been a recipe for at least short term move higher in the metals.

But the cartel’s takedown of the paper gold price has created a nice ex-import duty premium bid in the Indian gold market just ahead of India’s festival season:  “Dropping of the rates depend on the international market. If it continues, we are sure to have a bumper Diwali this year,” said N Anantha Padmanabhan, regional chairman, All India Gems and Jewellery Federation – LINK.

Please note that a sudden surge in legal kilo bar imports will not depress dore bar importation or smuggling, the latter of which is now estimated to fill about 30% of India’s annual gold demand now.

Recall that China was closed last week, while India was transitioning into it’s biggest buying season.  The banks used this opportunity to launch their most aggressive paper attack on gold since 2011 in London and on the Comex.   They also used the big drop last week to print profits at the expense of hedge funds and whiny retail bucket shop traders. But, the western gold cartel take-down of gold using paper has helped ignite India demand:  “In the past fortnight, gold has fallen in the international market by 5.8 per cent; the price in India is down 4.9 per cent. With the ‘pitrupaksha’ period over, when buying of gold is considered inauspicious, festive demand has started LINK.

With the bullion banks covering their illegal paper shorts, gold is the most oversold that it’s been in 3 years.  I suggested several weeks ago that we might get a “200 dma” pullback. Here it is:

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Again, I’m calling an unofficial bottom because, in a system that allows a criminal to run for President, there’s not telling the degree to which Wall Street will resort to illegal market manipulation in order to keep a lid on the price of gold. But  I am certain that the Indians, Chinese and Russians will – as Alan Greenspan would say – “measurably” increase their “consumption” of physical gold.

I will be reviewing and updating my favorite junior exploration picks in this week’s Mining Stock Journal.  I am featuring some graphs which reinforce my view that this sell-off is over, with the market “percolating” for another big move higher – possibly ahead of the next Fed policy move, which I believe will entail more QE.  I am also going to present some ideas to take advantage of the oversold condition of the highest quality large cap mining stocks.   You can subscribe to the Mining Stock Journal with this link:  MSJ Subscription. This includes email delivery of all back-issues.  The last issue featured a silver explorer trading below 50 cents that could ultimately be a $10 stock.

“Gold Prices Fall Just In Time For Diwali”

Holding physical gold and silver remains the primary hedge in preserving the purchasing power and liquidity of one’s wealth and assets in the difficult times ahead. The hedge needs to be held into and through the crisis, in order to provide its full benefit.  – John Williams, Shadowstats.com

I can’t figure out if the Fed/Wall Street bullion banks understand that every time they smash the price of gold with fraudulent paper gold contracts, it creates massive physical delivery demands in India and Asia.  But based on the market data in India/Asia, it would appear that the latest price take-down of gold has aroused the a sleeping gold giant in India.

The western banker gold cartel has made about a billion Indian really happy.  The paper gold price-management mechanism used to knock down the price of gold these past few weeks has stimulated a ground-swell of demand for imported kilo bars into India.

For the first time in several months, the ex-duty price of gold in India has been high enough to trigger heavy importing of kilo bars into India this past.  This is in addition to the heavy flow of dore bars and smuggled gold – the amount of which is completely ignored by the World Gold Council’s accounting of India’s imports.

The same is true for Asia:  “Individuals as well as business were picking up physical gold, as they see this pullback as an opportunity,” said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central – LINK.

As with every case of Central Bank/Government market intervention, unintended consequences always emerge to make the “problem” at which the intervention was directed even worse.   In this case, artificially lower gold prices have prompted a surge in eastern hemisphere buying.

These eastern Central Banks have been busy dumping Treasuries over the last 18 months.  It’s likely that they will use this opportunity to convert even more Treasuries into physical gold.

As John Brimelow, of the highly regarded “John Brimelow Gold Jottings” asserts:  “‘Someone” is going to have to work a great deal harder next week with China back and India in action, really for the first time this year both have been buyers.

Indian Government Gold Schemes Destined To Fail

The new schemes are aimed at monetizing some of the huge amounts of gold believed to be in private hands in India – in particular some of the religious temples have huge hoards of gold which have been built up over the years. The idea is to give gold holders a way of generating income from their bullion holdings, although the general distrust of the economic system which prompts Indians to hold gold in the first place will indeed likely have a limiting impact on the take-up.   Lawrie Williams, LINK

The India Government is rolling out a plan designed to coerce Indians into putting their gold into banks in exchange for receiving interest on the gold deposits.  The “Gold Monetization Scheme” and “Gold Sovereign Bond Scheme” are both aimed at “monetizing” the gold held by private citizens.  But why are the banks in India interested in getting ahold of the massive amount of privately held gold in India?  In reality, these “schemes” are nothing more than a thinly disguised “scheme” to implement a fractional gold system.

I highly suspect that the Fed/U.S. Government was instrumental in pushing this plan through the Indian Central Bank and Finance Ministry.  India will import at least 1,000 tonnes of gold this year (easily over 1,000 tonnes when smuggling is considered).  This is putting extreme stress on the ability of the western Central Banks/bullion banks to source gold that can be delivered into the big eastern hemisphere buyers, who require and demand physical delivery.

It’s in the Indian DNA to buy and hold possession of gold in all forms.  They have inherent distrust of the economic system, which is why they buy and hold physical gold in the first place.  In fact, as the article linked above references, there’s been a gold deposit program in place since 1999 but has attracted only 15 tonnes since its inception.

Exchanging gold in hand for a piece of paper that promises the payment of interest plus the return of that gold at a specified date in the future leaves the investor exposed to a high degree of counterparty.  Unquestionably the Indian Government wants to this gold so that it can turnaround and lease it to the western Central Banks, who are in desperate need of a steady supply of gold to deliver to China.  As for the extreme degree of the counterparty risk involved, just as the German Government…