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Gold Smuggling In India Increases Scrutiny By Officials
Posted February 18th, 2014
TANGIBLE INVESTMENTS - Los Angeles - by James ODell - Gold and Silver bullion prices were mixed on Tuesday with Gold turning modestly lower at $1,323.43 an ounce and silver rising to $21.93 an ounce, as investors seek the safety of gold and silver bullion amid fears of slowing economic growth in China and the U.S. In Asia, soaring demand for the yellow metal pushed China ahead of India as the world’s number one consumer of physical gold.
Gold’s latest gyrations may have shaken some investors, but in China, buyers just keep coming. “When prices drop, there’ll always be buyers,” said Jiang Shu, of Industrial Bank. Even as the price of gold dipped 28 percent last year, China's demand for gold bars, coins and jewelry hit record levels, climbing 32 percent. “It is the insurance product against further emerging market turmoil, more bad U.S. data, potentially too frothy equity markets and unforeseen market shocks,” wrote UBS analysts in a report. “With positioning so light and the sentiment turn in gold’s favor so recent, we expect that gold will remain bid.”
Meanwhile, gold smuggling in India has gotten so bad that passengers flying into the country must now declare all gold jewelry and bullion to customs officials at the airport. Officials claim that the move is aimed at curbing customs duty fraud, but it will be the first time in history that the government keeps tabs on all gold jewelry and bullion brought into India through each of its 19 international airports.
India's finance minister announced on Monday that the government may consider relaxing its gold import rules but not at the expense of a ballooning current account deficit. “Ultimately, what all this highlights is that there is currently much uncertainty with gold regulations in India and nothing can be ruled out at this point,” says UBS. “Better clarity will arrive after the fiscal year ends in March and, more importantly, when elections are concluded in May.”
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