Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

India's central bank keeps scheming to push people out of real metal and into imaginary

IMG Auteur
Published : February 11th, 2013
1000 words - Reading time : 2 - 4 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

By Suvashree Dey Choudhury and Siddesh Mayenkar
Reuters
Wednesday, February 6, 2013

http://in.reuters.com/article/2013/02/06/gold...idINDEE91505...

MUMBAI -- The Reserve Bank of India could limit gold imports by banks in "extreme circumstances," the bank said on Wednesday as it put forward measures to help the world's biggest consumer of gold rein in purchases and battle a record-high current account deficit.

India, which imported about 750 tonnes of gold last year with 60 percent of that through banks, has already increased the import duty on gold, which now stands at 6 percent.

But a record high current account deficit of 5.4 percent of GDP in the September quarter has raised concern at the central bank, prompting it to link further monetary policy easing to a lower current account deficit (CAD).

"If the CAD remains sustainably high -- say, in 5.5-6 percent range, for the next three or four quarters, then it might be a case of an extreme situation," a senior official with direct knowledge of the matter told Reuters.

... Dispatch continues below ...



ADVERTISEMENT

How to profit in the new year with silver --
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.

Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.

To learn about this report, please visit:

http://www.futuremoneytrends.com/index.php...=376&tmp...



The RBI said it would also consider introducing gold-linked financial instruments to divert savings of inflation-wary Indians from gold bars and coins into bonds, it said in a report published on Wednesday.

The recommendations now go to government for review and after its feedback, the RBI should announce new restrictions and products to curb gold import demand in the next few months.

The government has been warned of a credit downgrade by rating agencies due to high fiscal and current account deficits.

Duty rises helped to cut imports by 25 percent last year but analysts were sceptical these measures would have any serious impact on purchases in a country whose obsession with gold means households have more stored away than the U.S. Federal Reserve.

And the central bank itself, describing demand for gold as "excessive," added that it would be reduced only if inflation were benign and there was price and macroeconomic stability.

Headline inflation fell to a three-year low of 7.18 percent in December but still remains above the central bank's comfort level of around 5 percent.

"More restrictions from the government will result in more illegal imports ... unofficial imports have already started in Mumbai," said Kumar Jain, vice president of the Mumbai Jewellers Association, which groups 12,000 jewellers.

Other measures could include a special "gold bank" that would buy gold from individuals at much higher rates than those offered by local jewellers in an attempt to move some of the 20,000 tonnes of gold stored by households into the economy.

"Even if these proposals are implemented, the impact on gold imports will be limited till the point it is possible to unlock the idle gold stock," said Samiran Chakraborty, regional head of research Standard Chartered Bank of India.

"I think these rules could have a marginal impact on the current account deficit due to the shock-and-awe effect, but not a sustained impact," Chakraborty added.

The central bank itself admits these are only small steps and unlikely to bring down gold imports significantly in India.

"Demand for gold in India is autonomous and may not be amenable for reduction through policy intervention. Several studies have empirically validated that gold can be regarded as a long-run inflation hedge," the RBI said in its report.

Other measures proposed include removing incentives for banks to trade bulk gold with jewellers as banks have been charging them rates below the so-called base rate offered to their best customers, a move which could sharply bring down gold loans. Banks extend gold loans in the form of gold bars to traders at a fixed rate.

The central bank also wants to educate rural customers, who buy some 70 percent of imports, about investing in gold-related products, but fell short of details. Some 70 percent of India's population lives in rural areas where access to banks is poor.

* * *

Join GATA here:

California Resource Investment Conference
Saturday-Sunday, February 23-24, 2013
Hyatt Regency Indian Wells Resort and Spa
Palm Desert, California< target="_blank"br> http://www.cambridgehouse.com/event/cal...stment-confe...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:< target="_blank"/p>

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:< target="_blank"/p>

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:< target="_blank"/p>

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:< target="_blank"/p>

http://www.gata.org

To contribute to GATA, please visit:< target="_blank"/p>

http://www.gata.org/node/16



ADVERTISEMENT

GoldMoney adds Singapore vaulting option

In addition to its precious metals storage facilities in Hong Kong, Switzerland, Toronto, and the United Kingdom, now with GoldMoney you can store gold and silver in Singapore in a high-security vault operated by Brink's Singapore Pte Limited. To find out more about the new vault, please visit:< target="_blank"/p>

http://www.goldmoney.com/singapore?gmrefcode=gata

GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults.

It's easy to open an account, add funds, and liquidate your investment. For more information, visit:< target="_blank"/p>

http://www.goldmoney.com/?gmrefcode=gata


Companies Mentionned : Metals X |
Data and Statistics for these countries : Hong Kong | India | Singapore | Switzerland | United Kingdom | All
Gold and Silver Prices for these countries : Hong Kong | India | Singapore | Switzerland | United Kingdom | All
<< Previous article
Rate :Average :0 (0 vote)
>> Next article
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.