Koos Jansen
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Koos Jansen
Posted on 4 Mar 2014 by

India Imported 6125 Tonnes Of Silver In 2013

I’m glad you’re able to read this post. This website has been suffering from many DDOS attacks in recent weeks that not only prevent people from reading my posts, additionally it makes it very hard for me to reach my own server to publish. I will try to figure out how to protect In Gold We Trust in cooperation with my web host to insure better service for my readers in the future.  

Back to business; India’s customs department DGCIS just came out with their final trade numbers for gold and silver in 2013. Only gross import numbers for both precious metals are disclosed in these reports, the export numbers I grabbed from the Comtrade database (although these numbers are quite insignificant).

Starting from August 2013 all Indian traders had to export 20 % of their gold imports. This was a measure designed by the government, on top of an import duty that was raised to raised to 10 %, to slow down gold import. Of course the only result from these measures was that official gold import dropped like a brick, premiums skyrocketed and Indian supply shifted to smuggling. In this next chart by Nick Laird we can see how the import duty pushed the premiums to 25 % in january.

Indian Premiums 2014

The loss for the Indian government is that they miss revenues since they raised the import duty from 4 % to 10% through 2013 and implemented the 80/20 rule. Crime has taken over gold trading with all due consequences. Sadly history repeats itself. Official import crashed hard through 2013.

India gold tm 2103

India gross imported 173 t in H2 2013, down 73 % from 631 t of in H1. Total gross import in 2013 was 804 t, down 20 % from 999 t in 2012. From Jayant Bhandari, who travels a lot through India, I’ve been told that smuggling gold into India is quite easy as customs at the airport and the army at the border are happy to take a bribe. He wrote me:

Some of it comes via planes (via Dubai and Singapore, legally and illegally), some through the Bangladesh border and a minor part through Nepal and Pakistan. I don’t think it is worth the risk to bring it via China. Bangladesh border is the easiest, a few dollars of bribe to the army guys does the job.

I often hear analysts saying that there is shortage of gold in India. Incorrect. It is more liquid a commodity than water is. The spread is so thin that you can often buy and sell at the same price — the trader makes his margin from making jewelry.

Before the 90s, import of gold was heavily regulated and carried a massive customs duty. Of course, in those days most gold arrived in India through smuggling. A big mafia had built up in Mumbai and Dubai, mostly catering to India’s gold demand. Two things happened as a result: Government lost all prospects of earning revenue from gold imports, and most importantly, smugglers ran a ruthless empire in several Indian cities, particularly in Mumbai, controlling human-trafficking (with horrible consequences for poor girls and children) and financing the real-estate and the film industries. They were the unofficial rulers of Mumbai. When restrictions on gold were eased in early 90s under pressure from IMF, the same smugglers took the shape of what got to be known as terrorists. (All this should not sound strange to those who understand the history of prohibition in the US).

The current restriction and heavy custom duty on gold will repeat the consequences of the era before the 90s. But really in an irrational world where rhetoric has more value, who cares about the real consequences? Indeed, based on my many conversations with traders, all gold that India needs is already coming through smuggling. And smugglers want restrictions on gold imports to stay in place — they haven’t had it this easy for a long time.

The premiums on gold, currently 15 % above international prices, pushed a lot of Indian savers into silver. Indian silver import in 2013 was 6125 t, and all-time record, up 189 % from 2115 t in 2012. In December silver import accounted for 825 t, up 108 % m/m, 6560 %  y/y.

India silver import 2103

I wonder if the current Indian government is satisfied about its 2013 precious metals policy and if the next government will choose the same path.

Koos Jansen
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  • tom thumb

    Nice work, the DDOS is their way of trying to hide the truth, keep up the good work Koos.

  • Navigator

    I guess this means that Indian gold demand is nearly back to normal with smuggling filling in the gap.

  • LV

    I´ve experienced a lot of difficulties accessing the site. That can only mean that Koos is doing important work.
    Keep strong all truth seekers and specially Koos.

    • Anonymous Coward

      As an IT security professional working with networks, I think it is sad that DDoS attacks have become so common. Defending against it is repetitive and boring work for me.

      But before I give you my 2 grams of advice on how to defend against it, I have to warn: It has also become common for administrators of poorly run hosts and networks to use “it was a DDoS attack” as a bad excuse for downtime.

      Today most DDoS attacks against webservers are one of two types:
      1) Reflection attacks via insecure DNS or NTP servers. These attacks cause a large flood of data being sent to the attacked host. Usually this ends up with the IP of the victim being blackholed by the local network provider to protect their other customers. Blackholing means that the website cannot be accessed at all, and usually the web site administrator is asked by the network administrators to get a new IP address or move elsewhere. It is generally not possible to find the source of this kind of DDoS attack.
      2) More direct attacks using various ways to overload the web server. Depending of what way the attacker tries to overload the web server, it is usually possible to defend against it, but it is quite technical to explain how. Finding the source of this kind of DDoS attack is often easy, unless a botnet is used to do it.

      My 2 grams of advice, without knowing more about the situation, would be: Unless your provider already has complained that they see DDoS attacks targeting you, you should contact them and ask them if they are sure the downtime is due to DDoS attacks, and if these DDoS attacks look like they are targeting your site. If they do not answer yes to both questions move to another provider, as the DDoS attacks are probably not against you (if DDoS attacks at all, and not other problems). Otherwise you should consider using one of the services protecting against DDoS attacks. Cloudflare is one of these services, which have been a great help to some of my clients, but there are others.

  • hambone

    Koos – I’m simply astounded by the size of this new buying and the outcome we saw in ’13…

    based on #’s from World Silver Supply 2013 (whatever those are worth..still gotta have some kind of baseline to work from)

    ’13 Silver global supply = 1,050,000,000 oz or 32,812 tons/yr (mining / scrap)

    Total global inventory of silver is less than 1 B oz (below 32,000 tons)…down from 9 billion in 1950.

    end users in ’13:

    50% = industrial users (16,400 tons)
    25% = jewelry / silverware (8,200 tons)
    25% = investment demand (8,200 tons)

    India in ’13 increased from 2100 tons to 6100 tons = a 4,000 ton increase and bought 75% of all silver available for investment? and this while mint sales worldwide were at record pace while industrial / jewelry maintained their usage and silver supply was flat from ’12 to ’13?

    And price collapsed although the silver ETF’s who supposedly hold phyz did not off-load to meet the demand as their cousins did in the gold market (silver ETF’s supposedly have 700 million oz or just under 22k tons)

    Either somebody has far more or far less supply than they are admitting to have met the ’13 demand coupled w/ a crash in price? Either this is the greatest mismatch of supply / demand and the greatest mis-pricing of an asset in history or stackers (myself included) are victims of some strange hoax? When I try to explain to people this situation, they simply can’t believe such an extreme mismatch is possible…that relatively so little money could buy up and corner all available silver at the margins…which makes me wonder if I’ve got it all wrong?

    And yet I don’t hear a peep from industrial users or mints or bullion dealers that they cannot source silver (blanks maybe but supposedly not silver) or are seeing any tightness causing a bidding war. Somewhere, somehow, someone is all wrong (and if it’s me…somebody help me know where I’ve gone wrong)???

  • Zhanglan

    I don’t hold any significant amount of Silver and the following interactive chart is posted without comment solely as a useful resource for others to consider and form their own interpretations:

    http://www.macrotrends.net/1333/gold-and-silver-prices-100-year-historical-chart

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