Indian Gold Dealer: “Gold Is Now Trading At $1800oz.—Small Factories And Workshops Are Shutting Down”
August 23, 2013 | By Tekoa Da Silva
I had the chance this week to reconnect with Vishal Vyas, head of operations at India’s top bullion dealer, Pushpak Bullions Pvt. Ltd.
It was a powerful conversation, as Vishal indicated that the Indian Government and Central Bank is stepping up its fight against gold, with punitive taxation and trade controls. As a result he added, gold is now trading at elevated levels of $1800 oz. within the country. Despite these changes however, Indian families are still buying gold in “small quantities every month”.
Speaking towards tightening trade controls being exercised against gold, Vishal said, “Our Finance Ministry and Central Bank is trying to curb gold imports as they feel that gold imports are the major contributor to the current account deficit in the Indian economy. So since May 2013, by various methods and changes in policies, they have been trying to limit or stop imports and…[have increased] import duties on both gold and silver from 8% to 10% on gold, and from 6% to 10% on silver…They have also banned imports of [bullion] coins and medallions…those cannot be imported into India now.”
In terms of the local impact of these changes, Vishal said, “On the street level, I’ve see many of the small factories and workshops becoming non-operative over the last two weeks because they don’t have [any] gold to process. Secondly, I also see gold coming in from illegal channels in the market which is not good.”
The trade controls are also pushing the price of gold higher Vishal noted, in that, “Since import duties have risen, the gold price in the Indian market is the same as it was when gold was $1800 oz. When $1800 an oz. gold was in the market, it was 31,500 rupees per 10 grams of gold. Today gold is below $1400 oz., and the price is the same—31,500 rupees per 10 grams of gold.”
But despite the elevated pricing and increasing trade controls, Indian families are still buying gold, “[In] small quantities every month or maybe every couple of months or alternate months,” Vishal noted.
“They put 20% or 30% of their savings every month into gold…[and] when they get perks or added benefits from their commercial or professional careers…they’ve started investing 20% to 30% of that too,” he concluded.
This was another powerful interview, conducted during a critical time in the Indian gold market. It is required listening for precious metals investors and serious market students.
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To learn more about Pushpak Bullions, visit: PushpakBullions.com
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Tekoa Da Silva
Bull Market Thinking