Thursday, August 15, 2013

India Further Restricts Gold Imports to Protect the Rupee

The monetary situation in India is very interesting because of implications to physical gold demand and prices and as an example for when a currency begins to fail.  India has been steadily restricting gold importation for many months to protect the Rupee, which has depreciated almost 15% versus the USD in the last 3 months.  They started by increasing duties and now have outright outlawed gold coin and medallion imports.  India has been trying to stop gold imports without completely destroying the domestic jewelry industry.  I assume that medallions includes ingots or bars that an Indian jeweler would import.  So now the government has become so desperate to protect the Rupee that they are writing off the jewelers.  Silver jewelry is sure to become even more popular.

This move by the Indian government is a very bullish sign for physical gold and silver.  It shows the significance of gold in India.  Ever draconian measures emphasize the Rupee's accelerating devaluation, which will increase hoarding of the precious metals.  Imagine if your savings were in Rupees and the cost of living was inflating at 6%, and food prices were growing at 10%, and the US Dollar was strengthening 15%+.  Would you try to protect your wealth by investing it in an asset that cannot be printed?

If you believe that the US is heading down a similar road of dollar devaluation and cost of living inflation, then it would be wise to protect your wealth now before regulations are created to prevent it.

India Bans All Gold Coin Imports, Increases Capital Controls by Tyler Durden at Zerohedge

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