Indian Precious Metals

Last week Indian officials announced they were in no hurry to repeal the gold import restrictions as their current account deficit simply could not handle the jump in (official) gold imports that would inevitably follow. The graph below however illustrates the extent to which silver imports have risen in response, with 2559 t imported year to date.  When you consider this together with our previous report on the declining silver stocks on the Shanghai Exchange at a time when the price is below many miner’s cost of production it highlights the extent of silver demand in key eastern markets.  Stepping back a little, consider that the 10% import duty is applied to both gold and silver.  Silver imports have increased since it was introduced whereas gold has markedly decreased.  Verified reports of rampant gold smuggling abound, however silver’s relative bulk (both in $/oz and relative density) makes smuggling all but impossible.  One can only wonder at the real extent of gold smuggling going on and where (if?) that fits in already strong global gold demand figures.