I first reported on record high gold premiums in India a couple of weeks ago. Since then, the story has become even more interesting as Reuters reports that gold supplies have completely dried up just ahead of major gold buying festivals and despite continued record premiums. While it is clear that Indians are finding a way to buy gold anyway via black markets, this is still a very interesting story to keep an eye on.
More from Reuters:
India has imposed several restrictions on imports of gold, the biggest non-essential import item, to curb a record trade deficit. Gold imports in September fell to 7 tonnes from 162 tonnes in May.
Of course, if additional demand wasn’t being met via black markets the price of gold would be far lower than it is.
“Still gold is not available, and they are charging $120-130 (an ounce) of premiums,” said Bachhraj Bamalwa, director with the All India Gems and Jewellery Trade Federation.
Most of the demand is being met by recycled gold or through unofficial or illegal supply channels, traders said.
“Sales have dropped by 50 percent… and everything is happening according to the wishes of the government,” said Harshad Ajmera, proprietor of Kolkata-based wholesaler JJ Gold House.
I’m sure this will all work out just as the government anticipates…
Full article here.
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