LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

COT Gold, Silver and US Dollar Index Report - May 17, 2019
By: GoldSeek.com

Gold Miners’ Q1’19 Fundamentals
By: Adam Hamilton, CPA, Zeal Research

Three safe-haven reasons to own gold
By: Richard (Rick) Mills, Ahead of the herd

Trump’s China Blunder
By: Peter Schiff, President and CEO Euro Pacific Capital

Is the Trade War a Catalyst for Gold?
By: Jordan Roy-Byrne CMT, MFTA

Bitcoin Mania Is Back! Are You Ready to Rumble?
By: Rick Ackerman, Rick's Picks

Precious Metals Update Video: Gold support around $1,282
By: Ira Epstein

Asian Metals Market Update: May-17-2019
By: Chintan Karnani, Insignia Consultants

GoldSeek Radio Nugget: Louis Navellier
By: Chris Waltzek, GoldSeek Radio

Gold: Ratio Charts Offer the Key to the Bull
By: Rambus

>
 
Search

GoldSeek Web

 
Chart of the Week: India Declares War on Gold



-- Posted Monday, 17 June 2013 | | Disqus

By David Franklin, Sprott Asset Management

With the Indian rupee plumbing new lows against the US dollar and the country’s current account deficit at record levels, the Reserve Bank of India (RBI) is taking the easiest route to tackle both; it has declared a war on gold. Our Chart of the Week shows the Indian current account deficit from 1970 to the end of 2012. As you can see, it has hit a record deficit level and continues to weaken. Put simply, a current account deficit occurs when a country's total imports of goods is greater than its total export of goods; this situation makes a country a net debtor to the rest of the world. India is the largest consumer of gold, almost all of which is imported and is a significant contributor to this deficit.

The RBI has drawn the battle lines and targeted gold imports as the main culprit. The central bank has announced a series of measures over the past month, including restraining lending against gold-backed assets, and restricting gold imports. The hike in gold import duty to 8% this month is the most recent announcement in this drive and doubles the duty that was applied at the beginning of this year.1 The RBI has asked bank trading houses not to import gold on a consignment basis for domestic sales, further insisting on 100% cash margin for letters of credit. The restrictions were invoked after imports soared to 162 tonnes in May from 142 tonnes in April on the back of weak international prices. In their campaign against gold imports the Indian finance minister P. Chidambaram has even urged banks to advise their customers not to invest in gold. “I think the Reserve Bank has advised banks that they should not sell gold coins,” said Chidambaram, while speaking at an event in Mumbai.2

Gold is synonymous with savings and security for many of India's 1.24 billion people. Only about 36,000 of India's 650,000 villages have a bank branch, which mean the working class hold much of their assets in gold coins and jewelry. Further increasing demand is gold’s cultural significance which makes it essential for weddings and other ceremonies. We suspect that there is very little the RBI can do to supress the consumption of gold and the central bank’s efforts will serve only to push the gold trade underground through smuggling and off-shore trading centres.

ST-India -gold -tall

Source: Bloomberg, Sprott Asset Management LP

Sprott Group offers a wide range of investment products and services to U.S., Canadian and International investors. learn more »


1 http://timesofindia.indiatimes.com/business/india-business/Government-raises-import-duty-on-gold-to-8/articleshow/20452631.cms

2 http://www.reuters.com/article/2013/06/06/india-gold-idUSD8N0E900920130606

 


-- Posted Monday, 17 June 2013 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.