Indian central bank to place restrictions on imported gold
roadrunner
Posts: 28,303 ✭✭✭✭✭
Indian CB news
The suggestion is that they will allow only enough imported gold to meet what Indian jewelers need for export. Seems to me this will immediately
force a lot of transactions underground. Total imports last year were 830 tonnes. Much of that probably went to the people. I don't see how they
can just stop hundreds of tonnes of consumption. North Korea did something like that not long ago and it just increased how much gold traded in the
black market.
The suggestion is that they will allow only enough imported gold to meet what Indian jewelers need for export. Seems to me this will immediately
force a lot of transactions underground. Total imports last year were 830 tonnes. Much of that probably went to the people. I don't see how they
can just stop hundreds of tonnes of consumption. North Korea did something like that not long ago and it just increased how much gold traded in the
black market.
0
Comments
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
There are many articles about people smuggling gold biscuits.
It seems they already have a lot of people smuggling gold through customs.
<< <i>Do a news search for "gold biscuits". >>
I knew it would happen.
<< <i>Governments always seem to want to fight the will of the people (and the markets). I'm confused. Why would a government care about gold imports? >>
I'm guessing their government would prefer that their citizens invest their money in their country's businesses rather than export their money to buy a non-productive assets such as gold.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>Governments always seem to want to fight the will of the people (and the markets). I'm confused. Why would a government care about gold imports? >>
Because if India imports more than it exports it creates a currant account deficit. India's deficit is already large and increases could weaken the rupee thus creating inflation. The Indians could create a self fulfilling prophecy.
Knowledge is the enemy of fear
I doubt that gold imports are causing inflation in India. Price inflation is the phenomenon of too much currency chasing too few goods - which reduces the purchasing power of that currency. Gold is just one more commodity in the scheme of things, so adding it into the mix of "available goods" should dilute the effect of having too much currency in circulation - not potentiate it.
If the people want to buy gold to PROTECT against inflation and against government's printing of too much currency, there is no real reason that they should be denied that option. Capital controls are oppressive.
India is one of the BRICs who are pursuing the new policy of bilateral trade agreements in order to avoid using the dollar as the international trade unit, mainly because it puts them in the position of financing US consumption when they utilize the dollar to make trade payments (much to our advantage).
India is traditionally the world's largest consumer of gold. If gold was going to cause inflation in India, wouldn't it have happened long before now?
I knew it would happen.
However, a very large account deficit can put pressure on a country's currency. This pressure can cause the currency to drop, thus increasing inflationary pressures. Indiea's currency is and has been vulnerable. The Indian Govt doesnt want to exacerbate the situation.
Gold cannot cause inflation. It is just an inanimate object. Inflation is caused by perception and behavior. Gold is incapable of these traits.
Knowledge is the enemy of fear
I knew it would happen.
Maybe. What does India export?
And if India's currency is dropping, isn't that pretty good justification for buying gold before it drops further?
Possibly, if you are Indian. What are the demographics in India?
Is the Rupee going to decline further?
In 2011 Gold averaged about 78,000 rupee per oz. Today gold is about 80,000 rupee per oz. Has gold gotten cheaper for the Indians buying with rupee?
Knowledge is the enemy of fear