Posted on 03/06/2014 11:44:29 AM PST by blam
Renewed Indian Demand Driving Gold Prices Higher?
Commodities / Gold and Silver 2014
Mar 06, 2014 - 02:04 PM GMT
Julian_DW_Phillips
Current Situation
Since last August, the Indian government placed a stranglehold on gold imports into the country by requiring that 20% of all gold imported be exported as jewellery. This forced the amount of gold imported to drop to 30% of former levels until October of last year. Then the amount imported rose to 38 tonnes a month and has been at that level since then. The amount of gold that was expected to be imported for the year was north of 1,200 tonnes. It only achieved an imported total of 825 tonnes, around 400 tonnes less than expected.
Lifting of restrictions
If the Indian government eases these restrictions in the end March budget seven days ahead of the elections (and we expect they will), will it cause a jump in demand from the London market -- where India sources its gold from -- sufficient to send the gold price soaring? It appears so, until we peer under the obvious at the basics.
The reason the government gave was that it had to curb its Current Account Deficit, which has been part of the solution. It has since 'officially' pared that deficit back substantially. To ease restriction at the end of March would gain votes for the government, so it has every incentive to do so.
Smuggling Incentivized
However, a simple easing-up on restrictions will not be sufficient to increase demand. The reason is the very high duties the government started to raise from the start of 2013.
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
Someone please tell me why Au is up up and away but metals and mining are in the toilet?
Thanks for the graph. Do you have one showing Au prices with a moving average? Thanks again. #:o)
Supply and Demand.
Demand, and Supply.
Demand, and DEMAND! (read f-e-a-r)
Mint gold bars with a picture on it and call it a paper weight.
BINGO ! Thanks a million!
Goldbug ping.
It is my experience that the stocks lag, but they do eventually follow.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.