Gold Smuggling In India – Who Keeps The Confiscated Gold?

Gold Smuggling In India – Who Keeps The Confiscated Gold? by Rory for The Daily Coin

Anyone that has been studying, acquiring or knows anything about the physical gold market is probably familiar with gold smuggling into India. On occasion we’ll report on this situation but not very often as the nature of smuggling is a liars business. Why would I report what known liars are discussing? Why would I report on a situation that is based on deception and operating in the shadows? Probably not going to get very reliable reporting.

What we can report is what the government of India confiscates from smuggling when they are arrested and found to be carrying gold that has not gone through the tax and import duty system so the government can steal, I mean collect their bribe, I’m so sorry, I mean tariffs and duties.

Gold confiscation is real. If you don’t believe me just any of the people that had their gold taken from them in India in the first half o 2019. Their gold is now in the hands of someone else. Here’s the question – who now has the gold? Remember, this gold is considered illegal and has been earmarked for something other than being in the open market in India, Japan or wherever it was confiscated.

The World Gold Council (WGC) estimates that a total of around 40 to 50 tonnes of gold have been smuggled to India so far this year. The announcement was made by WGC’s India Managing Director P.R. Somasundaram. It must be recalled that nearly 100 tonnes of the yellow metal were smuggled into the country during the whole of 2018.

According to WGC, the gold smuggling in India during the full year 2019 is not expected to surpass the 2018 levels, mainly on account of subdued gold demand in the wake of historic high price level. This is despite anticipated increase in gold smuggling during the third and fourth quarters of 2019, due to recent hike in gold import duty from previous levels of 10% to 12.5%. Source

If one looks at this information there are a couple of questions that come to mind. If the gold that has been confiscated, by the Indian government why is there not an exact, precise amount of gold? 10 tonnes of gold is a massive swing – estimates that a total of around 40 to 50 tonnes of gold have been smuggled. I don’t know about you, but I would love to have 10 tonnes of gold or 20,000 pounds / 320,000 ounces of gold from nowhere. The next question is if corrupt-to-the-core government of India is misreporting a 10 ton swing in gold confiscations, how much more is missing or unaccounted?

The reason I’m making a big deal of the 10 tonnes is simple – check out this report

According to government sources, the seizure of smuggled gold by Indian customs officials totalled 1,197.7 kilograms during the quarterly period from April-June this year. This is significantly higher by 23.2% when compared with the seizures during the corresponding quarter a year before. The illegal gold trade is likely to increase further in the coming months, mainly due to lifting of gold import tax from 10% to 12.5% in the Union budget, which in turn would increase smugglers’ margins. Source

I have never, nor will I ever claim to be the sharpest tool in the shed, but these two reports, from so-called “authoritative sources”, Indian government and World Gold Council, run contrary to one another. One is vague to the point of “estimating” a 10 ton swing while the other is so precise it actually uses a fractional equation. Are you kidding me?

Next question – where does all this gold end up? It appears it is not going into the coffers of the Central Bank of India as there official gold did not increase by “nearly 100 tonnes in 2018“. If the gold is transferred back into the open market who gets the fiat currency from the exchange? What gold market exchange is used? Are the bars, jewelry and medallions melted down then transferred back into the market? Who is responsible for all this taking place? Where is this reported?

This report is from 2014 and may shed a little light on the situation – at least in Bangladesh. I would presume something of this sort happens in India as well, but, once again there is literally tonnes of room for questions, error and nefarious activity.

However, Quazi Saidur Rahman, General Manager of the Bangladesh Bank’s Forex Reserve and Treasury Management Division shed some light.

He told bdnews24.com: “After the seized gold is received at the central bank, they are put in the vault directly. The gold stays there until the cases are disposed of. The government confiscates the gold after that.”

Then the gold is either auctioned and the earnings deposited in the state coffers; or, if they are of international standard, the central bank may buy them at the international market price and add them to the forex reserve, said Saidur Rahman.

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Former central bank Governor Salehuddin Ahmed told bdnews24.com every country keeps gold in its foreign currency reserves.

“Considering the possible profit, many countries buy gold from the international market and preserve them. They sell them when the prices soar.”

However, both Salehuddin Ahmed and forex reserve GM Saidur Rahman said the seized gold had no contribution to Bangladesh’s $20 billion. Source

Yeah!! That sounds plausible and acceptable to someone that trust Central Banks and government so much they acquire gold as a hedge against Central Banks and governments. Let’s see….said government seizes a persons gold then holds the gold until a time they see fit. Supposedly this gold is stored at the Central Bank. If this is the case why does their official gold holdings not rise and fall as the seized gold comes and goes? hmmm… Remember, the government of India seized somewhere around 100 tonnes of gold in 2018 but their official gold holdings did not reflect a 100 ton swing up then down. Where is this recorded and who is watching the watcher?

If this is not enough to convince a person that holding physical gold as a hedge against organized crime syndicates, like government and Central Banks, I’m not sure what would do the trick.

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The Daily Coin

Rory Hall, The Daily Coin and Gospel News Network. Beginning in 1987 Rory has written over 1,400 articles and produced more than 500 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Gold Seek, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Dr. Warren Coates and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Gospel News Network to enjoy some of the best economic, precious metals, geopolitical and preparedness news from around the world.