E-mails between a Chinese in Hong Kong and an Indian in Singapore - both physical traders and hoarders
Sent from my iPad
On Nov 21, 2013, at 1:03 PM, S wrote:
Hi K,
Many thanks for your insight and I wish government officials would give a free hand to the public.
How long will the public tolerate this suppression affecting their jobs, savings, freedom of choices vs Chinese could buy as much as we wanted ? Are there any dramatic increase in lobbying for this unpopular measure in India ?
What will be your best estimate in terms of Y-T-Oct 13 gold consumption and imports ( both official and other channels ) ? and the outlook for 2014 ?
Thanks in advance and hope the suppression does not affect you too much.
Best,
S
From: K
Sent: Thursday, November 21, 2013 12:28 PM
To: S
Subject: Re: Unofficial gold will continue to find its way into the country ( India ) to satisfy demand
Hi S,
Apologies for the late reply and also have missed out on replying to your on your earlier email.
Basically what has happened after the second duty hike in India, is that the normal official channels which were working since late 1990's for imports of Gold into India have become obsolete. After the govt. legalised Gold imports and slashed duties in late 1990's , imports of Gold were fairly transparent and it was easy to tally import data given by BBA along with data from WGC, refiners & banks. UBS had a fairly (and Scotia Moccata) good share of the local demand and they were also my inputs of Indian Gold demand. Since Feb 2013 after the second hike, all these sources of mine became reliable (not because they lie or fake data) but because most demand went underground as the local people started buying in cash/without any records to avoid harassment from the authorities. So likewise, imports were rising via smuggling which is very very difficult to track.
In late-Sept/early-Oct of this year one of my contacts said imports ahead of Diwali festive season would be approx. 20 tons in Oct whilst my other contact said 100 tons. Actually both were right and wrong as to how you look at it.
Please read this article of yesterday :
bbc.co.uk
It shows how smuggling has become rampant. The authorities will not admit it but they will only show that imports are down a lot as it helps them portray a good picture of the (worsening) current account deficit.
I am sorry but Indian demand now is almost impossible to be ascertained as smuggling is the big factor which no one can prove.
Hope you all well.
Kind Regards,
K
On Fri, Nov 15, 2013 at 4:23 PM, S wrote:
Hi K,
I hope you are doing well and wonder if there is a way to keep track those unofficial gold through Dubai or elsewhere entering into India ?
Your feedback is highly appreciated.
Best,
S
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WORLD GOLD COUNCIL: UNOFFICIAL GOLD LIKELY TO CONTINUE ENTERING
2013-11-15 08:11:07.730 GMT
NEW DELHI, Nov 15 (Bernama) – The intervention of the Indian government in restricting gold imports to the country is obviously reflected in the official levels of demand in the third quarter of 2013, but this by no means indicates that the appetite for gold in India is waning, World Gold Council said.
India amid its high current account deficit imposed a string of measures to curb demand for the yellow commodity, which is the second most expensive item on its import bill after oil.
It received the intended effect of substantially suppressing official demand figures, with total gold consumption in India standing at 148 tonnes in third quarter compared with 310 tonne in the second quarter of this year.
However, the strength of Indian demand in the first half of the year means that full year consumer demand is still on track to narrowly exceed 864 tonnes recorded in 2012.
According to the Council’s data, year-to-date demand of 452.2 tonnes is 13 per cent higher year-on-year, and only 18 per cent below the full-year total for 2012.
"There have been some increases in demand in other countries which have close links with India, some of which may be making its way back to the country through illicit channels, which have reopened in recent quarters following a long period of inactivity," said the council's managing director (investment) Marcus Grubb.
Gold entering the country unofficially through India's porous borders helped to meet pent-up demand, together with an influx of recycled gold that was drawn out by higher prices and promotions offered by retailers, it said in its report.
The council said while global recycling of gold fell 11 per cent compared to the same quarter in 2012, in India the recycling figure increased more than fivefold to 61 tonnes.
Heading into the fourth quarter and the major Hindu festive season, latent demand among Indian consumers remains very strong, as reflected in the persistence of local price premiums above the international gold price.
"It is likely that unofficial gold will continue to find its way into the country to satisfy demand. Reports that a good market for ten tola bars is re-emerging due to the relative ease with which they can be concealed reinforce this view," said the council.
-- BERNAMA
SM EE
15/11/2013 16-01ST
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