Jewelers in India Ban Gold Coins and Bars

PHOENIX - Aug. 17, 2013 - PRLog -- The Indian government is attempting to reduce its deficit, and part of that process includes a recent ban on gold coin and bar imports. The ban has affected global paper and physical gold, as India is the leading global consuming country of physical gold. At least, the country was until now; this new development has helped China take over that title. As a result of the recent ban, Indian jewelers have voluntarily decided to ban gold coin and bar sales for the next six months, or possibly longer if needed.

 

A number of high profile Indian jewelry retailers are leading the efforts, volunteering to stop selling gold coins and bars for the duration of the ban. 85% of the 40,000 All India Gems and Jewelry Trade Federation members have already agreed and implemented the ban, with the rest scheduled to join this coming weekend.

 

This is a very significant development, as gold coins and bars make up one-third of all gold sales in India annually.

 

The national ban has already shown some significant changes to India’s gold import numbers. In May, the country imported $8.4 billion in gold and silver, but that number dropped 70% to just $2.5 billion in June. This jewelry ban will make that number decrease even further this month and for the rest of the year.

 

India’s current account deficit (CAD) has been in need of a boost, and the ban seems to be doing just that.

 

In the meantime, other countries may be able to take advantage of the temporary ban in India. Because India imports and consumes so much physical gold and silver, the ban on imports will temporarily free up some supply for other countries. China is wasting no time, increasing its precious metal imports to meet skyrocketing demand.

 

Gold and silver investors in the U.S. and Canada should take note of the ever changing international physical precious metal trends. When the ban is lifted in India in a few months, global demand will likely increase. This could decrease the overall physical gold supply, and cause price increases for other countries.

 

It’s no secret that physical demand for gold and silver has increased this year, despite the underperforming stock prices for gold (GLD) and silver (SLV). With the ban in India in effect through the rest of this year, 2013 is shaping up to be a great time to invest in physical precious metals.

 

 

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