Indian Tiger Stirs
When the Indian government brought in the 8% and then 10% import duties and the 80/20 import/export rule official imports of gold to the world’s traditionally largest consumer plummeted as can be seen in the graph below. This graph does not capture the rampant smuggling which of course can’t be quantified. However June was the strongest month of imports in a year, saw a 48% increase on May, a 75% increase on June 13 and reaffirmed an upward trend that started late last year. Importantly too you can see below that premiums paid (faint green line) have reduced as imports increase indicating a constant and strong demand. The 80/20 rule means 20% of any imported gold must be exported which physically restricts imports beyond pricing. This trend is encouraging when considered alongside China’s continuing strong demand and the tightening supply.