Gold in India

Gold in India

Nigam Arora, chief investment officer of the Arora Report, would argue the current rumours surrounding India are the true reason for the recent fall in gold prices. Arora told Kitco News “The Indian Bullion & Jewellers Association has informed its members that they are hearing from certain circles of a potential ban on gold imports.”

Are these rumours true? Social media is in a buzz in Asia with word of the potential gold ban. These rumours ring louder than ever after Prime Minister Narendra Modi’s sudden ban of 500 and 1000 rupee notes.

A common method of turning so called “black money” into “white money” has always been to slowly buy gold by paying cash in large bills. With these large bills now being worthless, demand for physical gold in India could decline even further. Currently, at the height of wedding season, demand for gold is at an all time low. This is a huge deal from a country that usually imports about 700 tons of the yellow metal each year.

Other experts however, remain positive that these are merely rumours and once they are put to rest gold will come flooding back.

Frank Holmes, chief executive officer of U.S. Global Investors thinks that even if these turn out to be more than rumours, declines in the gold price will be merely temporary. He points out that Gold was banned once before in India in 1968; it failed then, and it will fail now.

Rumours or not, many experts believe gold prices will bounce back as soon as all the dust settles.

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