Is India now IRRELEVANT to the gold market?
With the exception of the 4th quarter of last year, Indian gold-buyers – once the cornerstone of global demand – have virtually disappeared from the global gold market.
As most will recall, during the 4th quarter of 2008, a Wall Street-engineered market “crash” (and subsequent panic) caused a brief plunge in the price of gold, to a low of less than $800/oz U.S. During that quarter, Indian gold-demand surged 84% over the same period in 2007. This is no surprise, as Indian buyers are legendary for their “price sensitivity”.
In the past, this has served them well, as they have managed to shrewdly buy most of their bullion during market troughs. However, for numerous reasons, those days appear to be gone for good – meaning that Indian gold-buyers are simply pricing themselves out of the market, while record-demand in most of the rest of the world keeps the price of gold above $900/oz (and clearly poised to set new, record-highs).
Indeed, some sources suggest that India was actually a net exporter of gold in February and March of this year (see “Indian gold EXPORTS holding down price temporarily”). With these months usually being a time of strong demand from India, there were countless “gold bears” predicting a dramatic plunge in the price of gold.
As I explained in a more recent commentary, those “bears” are simply living in the past (see “Gold demand driven by investment...PERIOD”). Indian demand is officially classified as “jewelry demand” (although in reality, while Indian gold is bought in the form of jewelry, it is clearly purchased as an investment). While jewelry demand fell by a modest 6% in 2008, retail investment demand increased by nearly 400%.
Meanwhile, state purchases of gold are also soaring. Russia has been a net buyer of gold for many months. China recently announced it had increased its gold reserves by 76% since 2002, becoming the 5th largest holder of bullion. This has been backed-up by smaller purchases by assorted other nations around the world – even the European Central Bank was briefly buying gold.
This strength in both the demand for gold and the price for gold comes despite a frantic effort by the Manipulators to drive gold lower. “Lease rates” have been kept negative, meaning that at a time of record demand for gold, the Wall Street banksters who lead the anti-gold cabal have been paying people to borrow (and “short”) gold.
This is one of the many outrageous acts by these criminals which conclusively demonstrates the overt manipulation of the gold market, but naturally the corrupt, U.S. regulators at the CFTC continue to simply 'look the other way' – as they have been doing for more than a quarter century.
Added to this, the Manipulators have been getting the U.S. propaganda machine to announce (and “re-announce”) the supposed sale of 400 tons of IMF gold. This one “sale” has been trumpeted by the propagandists on at least three or four separate occasions over the last year (since the original announcement), despite the fact there has never been final approval for such a sale, and not one ounce of gold has left IMF vaults.
Part of the problem for the Manipulators is that they have already depleted much (most?) of the bullion-holdings of the European patsies (such as the U.K.'s Gordon Brown) who have back-stopped their multi-decade campaign of price-fixing. Now those sales are trickling steadily lower, as there is an increasing public backlash over squandering the one valuable asset in their currency reserves.
Thus, the loss of Indian gold buying has largely been negated by the reduction in European gold dumping. This leaves the explosion in retail and sovereign demand as the driving force in this market.
Refusing to buy gold at even the current, depressed price, there is increasing anecdotal evidence that Indians are switching to less-expensive silver, where the Manipulators have been more successful – at the moment – in their price suppression (see "Silver Manipulation the worst in history - Ted Butler"). However, the potential impact of a surge in Indian silver-buying is another story (and commentary?).
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