Indian Gold Premiums Hit $100/oz: 8% above London Spot.

The Indian Government has made a wreck of the Indian gold market due to its anti-domestic gold interventionist policies, with gold premiums now hitting a record $100/oz. Indian premiums were near $40 last week, which I thought was bad for them then. This makes a $40 premium look like a good deal.

As Reuters reports:

Gold premiums in India, the world’s biggest buyer of the precious metal, hit a record $100 an ounce, about 8 percent over London prices, on a shortage of supplies to meet festival demand, traders said on Tuesday.

“There are no supplies in the domestic market, and there is a little demand due to festivals… what little supplies that come, go to exporters,” Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF) told Reuters.

Most suppliers in Mumbai and Kolkata have started quoting premiums in excess of $100 an ounce above London prices, more than double the $40 charged last week,Bamalwa said.

Gold imports have virtually dried up in India after the federal government introduced the 80/20 rule, creating confusion among government officials on its implementation and halting shipments for about two months.

This is a classic case of freedom being downright trampled on in favor of the supremacy of the State and bureaucracy. Indian citizens want to buy gold. Gold is important to Indians for festivals and their daughter’s weddings. They also want to buy gold because they plain ol’ distrust the socialist Indian government and how it manipulates the economy, which is a wise decision. They want to get rid of rupees and hold precious metals.

This makes the Indian government unhappy, because the overwhelming demand to get rid of rupees and buy gold cheapens the international value of the rupee and reduces their ability to manipulate the economy through control of the money supply. This makes bureaucrats less powerful, which is something no bureaucrat ever wants. So, they have enacted a great deal of anti-gold legislation to try and stop this from happening. It does not seem to be working. Indians are still managing to import a great deal of gold, to the chagrin of the Indian government. I approve of this. It pleases me.

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