Eastern Gold Rush – Russia and India Piling in Physical Gold
Eastern Gold Rush – Russia and India Piling in Physical Gold by Rory – The Daily Coin
The gold and silver community are very familiar with the Eastern flow of physical metal. Gold and silver have, seemingly, found new homes in Russia and India – money goes where it is loved and these countries love gold and silver by the truckload.
We have documented Russia’s accumulations of gold for the past several years. We stated a couple of months ago that if Russia stepped up their acquisitions by a very small percentage she would move into 6th position for global gold holdings. Russia would move ahead of China in official world ranking of physical gold. It seems Russia must have read that piece as they have decided to ramp up their efforts beginning in Q217.
In the second quarter alone, it accounted for 38pc of all gold purchased by central banks. The gold rush is allowing the Bank of Russia to continue growing its reserves while abstaining from purchases of foreign currency for more than two years. It’s one of a handful of central banks to keep the faith as global demand for the precious metal fell to a two-year low in the second quarter. But what may matter most is that gold is as geopolitics-proof an investment as any in the age of sanctions and a deepening rift with the US.
“Gold is an asset that is independent of any government and, in effect, given what is usually held in reserves, any Western government,” said Matthew Turner, metals analyst at Macquarie Group in London. “This might appeal given Russia has faced financial sanctions.” Source
With Russia also being a top tier gold producer she can acquire physical gold “off book” as well. Meaning, the Russian government could purchase gold mined within Russia and hold in an account that is not reported to the IMF for official gold holdings. This is pure speculation on our part but it would make sense to have an account of real money that is not known to the Western world since the Western world likes to use monetary weapons, like economic sanctions, against Russia.
Besides being the largest official buyer of gold, Russia is also among the world’s three biggest producers, with the central bank purchasing from domestic miners through commercial banks and not in the open market.
Since starting to accelerate bullion purchases in 2007, Russia’s holdings have more than quadrupled to 1,556 tonnes at the end of June, just behind China and more than Turkey, India and Mexico combined, bringing its share in Russia’s $427bn (€361bn) reserves to near 17pc.
If buying continues at a similar pace, the World Gold Council said the full-year increase in 2017 “could closely match” 2015 and 2016. Source
If we look at another member of the SCO, BRICS and the BRI we find India is as aggressive as Russia in the importation of gold. There is a very significant difference in the two countries and where the gold is headed. Gold moving into Russia is for the Central Bank while the gold moving into India is for the people. The Indian people love gold and silver and have been ranked 1st or 2nd in gold imports for a number of years.
Gold Bar Imports
In accordance with the GJEPC data, the gold bar imports by the country surged higher by nearly 52% in September this year. The monthly import statistics indicate that the total gold bar imports by the country during September ‘17 amounted to Rs 4,012.49 crores (USD 622.67 Million). In rupee terms, the gold bar imports have increased sharply by 46.53% over the year. The jump in dollar terms stood at 52%. It must be noted that the country’s gold bar imports during September last year were valued at Rs 2,738.35 crores (USD 410.30 Million).
Meantime, the September ’17 gold bar imports reported considerable surge when compared with the month before that. The country’s gold bar imports had totaled Rs 2,744.83 crores (USD 429.08 Million) in August 2017. Source
The Indian people also love silver. India is consistently one of the top importers of silver year after year. Once again, all this money, is going directly to the citizens and not to the government or Central Bank.
Silver Bar Imports
The GJEPC figures indicate notable decline in Silver bar imports by the country during the month of September 2017. The country’s Silver bar imports plunged by almost 26% during the month when matched with the imports during the same month a year before. The imports totaled INR 29.94 crores (USD 4.65 Million). In rupee terms, the Silver bar imports have declined by 29% when matched with the previous year. The year-on-year fall in dollar terms stood at 26.4%. It must be noted that the country’s Silver bar imports had totaled INR 42.20 crores (USD 6.32 Million) in September 2016.
Also, GJEPC data indicates that silver bar imports by the country in September recorded significant decline when compared with the previous month. The imports declined by more than 30% when compared with August this year. The country’s Silver bar imports had totaled INR 43.21 crores (USD 6.75 Million) during August 2017.
The silver bar imports during the initial half of the current fiscal year totaled INR 176.87 crores (USD 27.50 Million). The imports during this period were up modestly by nearly 11% when compared with the imports of INR 166.27 crores (24.85 Million) during April-September in 2016. Source
The first thing that comes to mind regarding India is smuggling. While it is impossible to account for the volume of gold and silver being smuggled into India it is well known to probably be the largest black market of physical gold in the world. The Indian people acquire so much gold on an annual basis that circumventing a few dollars here and a few dollars there makes a huge difference to the Indian people. They are extremely price sensitive and look to cut cost in what ever possible.
Gold and silver in physical form continue their migration East and with the latest data it seems like the festival season is going to be huge. At least the jewelers think so.