Nippon Steel hires Mike Pompeo to advise on US Steel deal
Nippon Steel also faces objections from the powerful United Steelworkers (USW) union, which fears the deal could lead to job losses.
India’s finance ministry fighting a crippling current account deficit and a weakening currency has tried various ways to slake the country’s insatiable thirst for gold.
Gold import duties have been pushed up tenfold – from 1% at the start of 2012 to 10% today. Excise duties now stand at 9% while new rules such as strictly cash only for imports, transaction taxes and even bans on gold-backed exchange traded fund investments have stymied India’s gold industry.
But the government import restrictions have led to a scarcity of physical gold inside the country (despite the concomitant increase in smuggling) which coupled with the weak rupee are putting a huge damper on sales of gold this year.
The sub-continent celebrated Dhanteras and Diwali, two festivals closely associated with bullion buying, last month, but 2013 turned out to be a subdued year.
Now that the country’s wedding season, another major driver of gold sales, is in full swing, premiums demanded by Indian gold traders from jewelers are shooting up again.
“Gold premiums shot back to $130 [an ounce above the London price fix] levels mainly on the back of severe shortage of supply and also due to slowdown in recycled gold trade,” the All India Gems and Jewellery Trade Federation said on Monday.
That is double the $60 – $70 an ounce premium paid during the festivals when many Indian families opted to pay to have their gold melted and made into new jewelry and gifts.
According to some estimates about 400 tonnes of recycled gold to enter the market this fiscal year to March 2014, compared with normal rates of about 130 tonnes, according to Thomson Reuters GFMS data.
India’s 330 million households are hoarding 18,000 – 20,000 metric tonnes of gold worth some $900 billion at today’s prices, representing almost 50% of the country’s GDP.
Image of Golden Temple in Amritsar, Punjab by Dainis Matisons
Comments
Steven P. Mitchell
Gold is a natural social demand in India with a very long history. With India’s government opposition to gold, India is accommodating the rules of the West – primarily Europe and the U.S. – at her own expense. Those advocating a cultural departure are trying to fit a square peg into a round whole. The Indian government should change the game.
Americans wear predominantly silver not gold. Indians wear primarily gold, not silver. What does that mean? Why is that? What have been the repercussions?