TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Precious metals prices turned higher on Monday while equities retreated, as Gold rose to $1,313.30 an ounce, and Silver inched up to $20.98 an ounce in the aftermath of the downing of the Malaysian airliner over Ukraine and Israel's massive ground offensive into the Gaza Strip. While Putin and other Russian officials blame Ukraine for the downing of the passenger jet, British Prime Minister Cameron, French President Hollande and German Chancellor Merkel are demanding that Putin convince pro-Moscow separatists, now in control of the crash site to "allow rescuers and investigators to have free and total access to the zone."
Gold prices began to move higher after the U.S. announced publicly that the Russian government was supplying rebels in Ukraine with rockets and that last Thursday one of those rockets likely brought down Malaysian Airlines flight MH17. The U.S. also charged that Moscow backed separatists were also likely provided training by the Russians. "This is a fundamental moment of truth for Russia, for Mr. Putin," said Secretary of State Kerry, as he headed to Egypt for cease-fire talks with Israel.
Meanwhile, now that India has decided to continue to battle its expanding current account deficit (CAD) problem, rather than reducing the draconian 10 percent import tariff on Gold, smuggling in India persists. “We do not think that smuggling will slow down in the near term, as the Indian government chose to keep import restrictions unchanged in the recent fiscal budget,” Barclays says.
“That said, restrictions could be eased later this year, but this is not likely until a concrete improvement in the current account deficit becomes evident.” According to estimates, roughly 200 tons of Gold was smuggled into India in 2013, legal imports topped 860 tons in 2012, but fell slightly to 825 tons in 2013 after the jump in tariffs. Demand in China, the top Gold consumer in the world, remains steady with the rolling monthly average also remaining stable.
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