Home > Global Finance, India, Indian Economy > Gold import bill may touch $100 bn by 2015-16
  1. February 8, 2012 at 7:31 am

    In my opinion, A naive one track thinking: West forces India, Gold is an asset etc.

    Politicians (who are linked to gold) would not like to see the gold prices fall. So, the timing of customs duty increase coincided with the fall of gold from 1900 to 1500 USD/oz in the international market.

    Two things-Rupee devaluation and customs duty helped prop up gold prices in India.

    Gold is on a downward trend. remember 1980s? The lost decade for Gold. dropped from USD 800 to USD 250 per oz.

    Gold (and property) is a parking place for undeserved-illegal-untaxed income in India.

    On the HT article: What hapens to the gold and the taxfree bonds in exchange for gold when gold prices fall? A US housing crisis (when house prices were less than the housing loan amount) like situation in India? Wait for sometime, see Muthoot, Mannapuram & other gold loan companies go belly up soon.

    Cannot discount the fact that policies in India are made to protect the properties of the influential.

  2. February 8, 2012 at 9:57 am

    In my opinion, A naive one track thinking: West forces India

    West forces India is a simplistic view of things.

    India is not doormat that West can wipe their feet on. India is not an island which is buffered on all sides by the seven seas – and can ignore the world.

    Indian foreign policy seeks to convince – and also uses pressure, influences, arm-twists, cajoles various actors on the world stage. Similarly others too try the same ploys with India.

    Ignoring real-politik may not be a good idea. Benign West is such a bad idea.

    Gold is an asset etc.

    I agree.

    Gold is not an asset. Gold is what you use to buy assets. These days (especially in the last 60 years), you dont use gold, but proxies, like paper currency.

    Politicians (who are linked to gold) would not like to see the gold prices fall. So, the timing of customs duty increase coincided with the fall of gold from 1900 to 1500 USD/oz in the international market.

    You should check gold price charts and the timing of the customs duty revision – and the entire sequence. You will find that facts are not on your side.

    Unfortunately, politicians are not all-powerful – that they cannot overcome the laws of causality. Politicians can in the short run subvert economies – but the greater outcomes will happen.

    Two things-Rupee devaluation and customs duty helped prop up gold prices in India.

    Rupee devaluation did keep up gold prices – and that itself was rather puzzling aberration. That one-month spike, tells you something.

    Customs duty hike happened after the decline in gold prices reversed.

    Gold is on a downward trend. remember 1980s? The lost decade for Gold. dropped from USD 800 to USD 250 per oz.

    You should read my post on the missing Russian gold. Also check out the issues related to Nazi gold and the Yamashita gold.

    That will explain how and why gold prices came down in 1992-2002.

    What hapens to the gold and the taxfree bonds in exchange for gold when gold prices fall?

    Gross gold production is approx 2000 tons per annum. And it is not going to go up – quickly or sharply. Demand is 4000 tons. The gap between supply and demand is made up by recycled gold. Gold sold by individual owners – and brought back into circulation.

    This demand and supply equations have been rather steady – with a slowly increasing gap. So, this idea that gold prices can come down is rather far fetched. The only way this can happen in the short run is if there a sudden dump by a few large sellers – like governments acting in concert.

    This is where Tunisia, Egypt and Libya come into play.

    But you can understand all this only if you believe that paper currencies are transient and gold is permanent. If you dont agree with this basic premise, we will just have to wait and see who is wrong.

    Believers in gold or paper-currency followers.

  3. February 13, 2012 at 7:16 pm

  4. ashoksinghania
    April 8, 2012 at 2:48 pm

    first thing can import touch 100billion answer big no. we are already consuming 30% of world annual production. is the quantity available.this has done for fdi in retail. foreign retailars cannot sell goods to india if we dont have dollars. please rememberikea unhappy with 30% offset clause.this is purely abackdoor policy for fdi in retail.moreever when we bring dollar in rbi print ruppes an give it you. if we consume gold money creation due to capital inflows will stop. the prent govt whichb has borrowed 25 lakh crore in last five year compare to just 5lakh crores in previous five years . how will govt borrow 5.69 crore without disrupting the market.this money is borrowed buy the govt. morever if remember rbi was sterlizing captail inflows buy floting bondsand paying 8% intrest and keeping dollar with bis or amercian govtfor fivepecent currently rbi gets only 1%. we are loosing yearly 50000crore due to this. point hare to be noted is that gold was abosving cvaptail inflows at zero cost to govt of india morever dollar is depriciating aassetand gold apperciating asset.morever gold is not libalityof any body but dollar is libality of united states of america.big indian industrail houses want to sell their equityto foreign retailerrs and earn big bucks. remember tata purchased licence in 2000crore and sold 25% euity stakefor 25000crore. have you ever seen busssiness like this. this is real story behind assocham report.

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