Indian smuggled gold volumes may have increased

New York closed Tuesday with the gold price at $1,127.40 down from $1,131.80. Asia saw prices slip back $2 this morning. The dollar was unchanged at $1.1225 this morning in London and the dollar index a little higher at 96.07. In London’s morning the LBMA gold price was set at $1,122.50 down from $1,124.60. In the euro this was €1,001.16 up from €1,000.49.  Ahead of New York’s opening gold was trading at $1,123.50 and in the euro at €1,002.05.  

The silver price closed at $14.64 up 5 cents over Tuesday in New York. Ahead of New York’s opening, silver was trading at $14.65.

Price Drivers

The trading range of the gold price is sitting on support at the lower end of the narrowing price pattern, at $1,123, so within this pattern it should be stronger today, we feel.

The IMF has issued a warning that we could see corporate failures in the emerging world.

With the Shanghai Gold Exchange closed tomorrow and for the next ‘Golden’ week, an opportunity arises for another ‘bear raid’ on the gold price. But Chinese demand will reappear after that week including the demand that could not be met because of the holiday.

The Indian wedding season starts tomorrow, ahead of the festival season that continues from now until the end of November. While there is a discount on gold prices of $7 this does not necessarily mean that demand is falling. Some believe this indicates an oversupply, but there is a situation in the country that is not measurable and will affect prices. With the ongoing 10% duty level on gold, smuggling has flourished. The World Gold Council guestimated two years ago that this is around 250 tonnes. Since then the smuggling has continued, likely getting more professional as the profits continue. Volumes must have increased over that time. It is therefore likely that discounts also persist on smuggled gold, forcing legal imports to be priced lower. Official imports may well decline but be replaced by smuggled gold finding its way onto the shelves. Official imports of gold are around 670 tonnes so far this year pointing to around 1,000 tonnes by year’s end. Despite smuggled gold being impossible to quantify, it cannot be ignored. Factoring in a decline in official imports we would certainly expect real Indian demand to be around 1,100 tonnes or higher for 2015.

Again on Tuesday, there were no purchases or sales from either the SPDR gold ETF or the Gold Trust. This leaves the holdings of the SPDR gold ETF at 684.141 tonnes and 160.29 tonnes in the Gold Trust.

Silver is back in sync with the gold price and should continue to be so today.

Julian D.W. Phillips for the Gold & Silver Forecasters- and

3 thoughts on “Indian smuggled gold volumes may have increased

  1. Patricia Sheahan September 30, 2015 / 12:02 pm

    Lawrie will you add Ian peres to your distribution list please. Thanks. Pat Sheahan

    Sent from my iPad



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