More Questions About Gold Being Smuggled Into India
More Questions About Gold Being Smuggled Into India by Rory for The Daily Coin
As we have pointed out on a number of occasions, illegal activity, like gold smuggling, is primarily conducted in the shadows with few people discussing the trade and fewer people providing detailed records like a company would keep. This doesn’t seem to be the case with gold smuggling into India. There seem to be an awful lot of “criminal gold smugglers” willing to discuss and share records of account regarding their smuggling activities.
In a recently published article in the India Times we another highly detailed account of what is happening with gold smuggling into India. As we had questioned in an article – Gold Smuggling In India – Who Keeps The Confiscated Gold? – back in September 2019, we find ourselves asking just about the same questions a year later as the “authorities” report once again on their in-depth knowledge of an activity that is supposedly conducted almost exclusively in the shadows.
PR Somasundaram, managing director of World Gold Council (WGC), the most authoritative industry body, says there is no statewise estimate, but South India accounts for 40% of India’s total gold consumption. An NSSO household consumption survey in 2011-12 had found that rural Kerala spent on average Rs 208 per capita per month on gold jewellery. The next was rural Goa which spent Rs 34 per person per month. This voracious appetite impacts India’s foreign trade balance as the metal is the second biggest chunk in India’s imports by value. When the balance becomes too unfavourable, governments look for ways to curb imports by raising duties. However, all it does is boost smuggling.
He adds there are multiple hawala syndicates operating between Gulf countries, mainly the UAE, and Kerala. They ask agents in those countries to crowdfund purchases of gold for distribution in the state. The metal is brought in through five major channels — sea, land, air cargo, passengers and privileged cargo. The preferred route, however, is air passengers who act as “mules”. In 2019-20, the Kochi Commissionerate of Customs seized 540 kg of gold, more than double the 251 kg of the previous year. It also registered over 800 cases of smuggling in the state that year.
Last year when we looked at this activity we reported the following…
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?
On the one hand you have very detailed information, but no one seems to answer any questions, have the capacity to shut it down or even report what happens to the gold after confiscation or where the funds go once the gold finds it’s way back into the open market!! While on the other hand you incredibly vague information surrounding tons of gold. This is mind boggling as we are talking about ton upon ton of gold that moves around in the underbelly of the global gold market.
If you understand Occam’s Razor, then by this point it should be presumed the people, once again, at the top of the food chain are in on the rouse. Not only are they aware of the activity one would have to presume they pick all the winners and losers that “smuggle” the gold into India. Of course, this means they are benefiting from this activity which explains why we have such a massive disparity in the reporting – very detailed to unacceptably vague. If there are, potentially, several hundred tons of gold floating around in the ether this would fund massive illegal operations around the world year after year after year. Of course these same “authorities” they are saying it’s all “drug dealers and pimps” are 100% correct. What they are not reporting it is they, themselves, that are the “drug dealers and pimps”.