Perhaps the most intriguing aspect of the latest move up in the price of gold is that it has occurred with India’s imports shut down since March 1. Gold imports had fallen off during February as the industry was anticipating that the Government would cut the 10% import duty on refined gold bars. Instead, the Government announced an excises duty on non-silver jewelry. The jewelers industry went on strike, which effectively shut down the gold market in India since March 1.
This past weekend the finance minister of India assured the jewelers that the Government would not harass the jewelry industry for collection of the tax. As a result, the jewelers ended the strike. The jewelry industry contributes close to 4% of India’s GDP.
The end of the strike also means that the India’s gold imports will resume and will likely include a big “snap-back” spike in demand, which should be a catalyst to more than offset the current intervention attempts by the Fed and the western bullion banks.
The mining stocks are up 78% since January 19, when the HUI index briefly traded below 100. This may seem like an unsustainable move. However, in 2008 the HUI doubled between late October and December 31, on its way from 150 to 636 by mid-September 2011.
Jason Burak of Wall Street for Mainstreet hosted me to discuss the deterioration of the U.S. and global economy and the financial markets. We discuss why the junior mining stocks currently represent an opportunity to make lifestyle-changing money by investing in them now:
If you are looking for good mining stock ideas, try out my new Mining Stock Journal. It’s a bi-monthly newsletter which will provides exclusive market commentary and analysis plus in-depth research on a junior mining stock idea. The current issue presents a Canadian gold exploration junior that is largely undiscovered yet has a “de-risked,” advanced-stage gold mine development. This stock has huge upside potential. You subscribe from this link – MINING STOCK JOURNAL – or by clicking on the image to the right.
The idea presented in the first issue is an emerging larger-cap gold/silver producer that is up nearly 20% since March 4.