Curbs on gold import norms leading to smuggling: Sharma

[Editor: Mr.Sharma says, "There need to have a balanced approach on the matter". Meanwhile, Bullion Vault wrote on 20th March, 2014: Opposition BJP leader Narendra Modi last September gave his support to jewelry manufacturers and retailers demanding easier rules, winning the support in return of trade body the Bombay Bullion Association (now the India Bullion and Jewellers Association). "Modi has said that any action on gold should look at the interests of the public and traders," says the Times of India, "not just economics and policy. The new government, likely to be led by Modi," says a separate report from global credit-ratings agency Moody's, "offers a chance for better governance"]

Mr.Anand Sharma

New Delhi  March 21, 2014: Commerce and Industry Minister Anand Sharma has favoured a review of curbs on gold import norms saying the restrictions are leading to smuggling.

"I feel for a review. I am not in favour of making it so difficult that it leads to increase in smuggling," Sharma told PTI.

In order to check rising Current Account Deficit (CAD), the government raised import duties and the RBI imposed curbs on import of the metal and also laid down various pre-conditions for inward shipments of the precious metal.

He said there is a need to have a balanced approach on the matter.

Gems and jewellery exporters, which account for about 15% of the country's total shipments, raised concerns over the restrictions on gold imports and demanded easing of norms in this regard.

Gems and jewellery exports dipped 4.18% to $3.59 billion in February. During the 11-month period of the current fiscal, shipments declined by 7.15% to $35.73 billion.

Gold and silver imports declined 71.4% to $1.63 billion in February.

Sharma said his ministry is ensuring the exporters get adequate gold to enhance overseas shipments of jewellery.

The enforcement agencies during the first nine months of 2013-14 have seized 1,074.41 kg of gold as against 326.23 kg during the entire 2012-13 fiscal.

According to reports, sleuths of revenue department have seized gold worth about Rs 245 crore being pushed illegally through the country's borders in the past one year.

As many as 700 cases of gold smuggling so far have been reported across the country during 2013-14.

Courtesy: The Business Standard

Reduce gold import duty to curb smuggling: Assocham

[Editor: The Economic Times on 21st March, 2014 reported that Livelihood of over 75 lakh jeweler families in West Bengal (WB) is threatened due to heavy custom duty on gold imports resulting in a minimum 7-10 days delay in procurement of the yellow metal, according to Assocham's Eastern Region Gems and Jewellery Council chairperson, Mr Shankar Sen. The government of India therefore, should stop its vindictive attitude towards a particular sector, especially when the Indian CAD has come down substantially] 

Ahmedabad, March 21: Apex industry body Assocham on Friday urged the Finance Ministry to reduce duty on imported gold to five per cent to check unprecedented surge in gold smuggling from the porous borders of Nepal and Bangladesh that have emerged as transit points for smuggling the yellow metal into India.

Emphasizing the need to cut import duty from the existing 10 per cent, Assocham Secretary-General D S Rawat said that a heavy duty on gold imports results in a delay of 7-10 days in procurement of the yellow metal through legal channels which is leading to huge losses for the domestic gems and jewellery industry.

“Gold smuggling is increasingly becoming lucrative,” he added.

Gold import duty in both Nepal and Bangladesh is nearly zero and the authorities in both Kathmandu and Dhaka are not that watchful to clamp down on such malpractices. Bangladesh, Myanmar, Nepal, Pakistan and Sri Lanka have witnessed significant surge in gold imports since Indian government imposed restrictions on its imports, while China has surpassed India thereby becoming world’s largest gold importer, he said.

Rawat also urged the Government to ease the 80:20 rule which requires at least a fifth of imported gold to be exported or reinstating the gold-on-lease model which allowed credit purchases of imported gold. Also, smugglers should be strictly punished

While India’s gold imports have come down by a whopping 95 per cent since August 2013 when import duties were raised, the imports through illegal channels have almost doubled to about 200 tonne. Last year, gold worth about $9 billion was imported into India through the black market.

Gujarat is India’s leading state in terms of domestic gems and jewellery sector as it contributes about 72 per cent of the country’s total exports in this sector.

Courtesy: The Hindu Business Line

WINNING STROKES: THINK DIFFERENT

The Nifty as expected did not move anywhere today hovering between 6485.70 and 6522.90 during the whole trading session finally settling at 6493.20. The markets are still confused as to who is going to form the next government and this would continue till the NDA comes up with some solid strategy, which shows that they would be in the charge of the affairs in the coming elections. However the action would be seen mostly in the small and mid cap space, some of which are still near their 52-week lows. Chartically speaking, the inability of Bulls to cross 6565--6570 ranges and the Nifty closing below 6500 is a sign of weakness. The longs should therefore be strictly avoided and risk taking traders can even go for shorts taking 6570 as the SL. 

As expected Shree Ganesh Jewelry House (I) Ltd today moved to Rs.26.70 before closing at Rs.26.50 (21 DSMA) in the BSE, just near the day's high. Also, this is above its 21 DEMA which is placed at Rs.26.13. The Shree Ganesh, in 2012 forayed into solar power generation by acquiring 55% stake in two companies — Alex Astral Power Ltd and Alex Spectrum Radiation Ltd — owned by the Kolkata-based Sureka Group, at an estimated investment of nearly Rs.100 crore. The solar power generation business was earning revenues and generating profits. The companies had 30 MW assets already commissioned as of April 2012. The company also commissioned two 25 MW solar power projects in Odisha and Gujarat, and a 5 MW solar power project in Rajasthan in 2012. It is also into Gold Loan and is already getting benefits from the RBI action a couple of months back. The outlook of the scrip looks bullish and we can hope for a target of Rs.41-42, in the next few trading weeks, as the government of India takes a series of measures to relax the gold import norms. 

TV18 Broadcast Ltd which was recommended in this blog a few weeks back at around Rs.22, today touched The first target of Rs.26. The scrip closed at Rs.25.75. 

Allied Digital Services Ltd today hit the upper circuits before cooling down at Rs.12.50. It seems the promoters will come out with positive results for Q4FY14. Hope from  now on, they will spare something for the shareholders after sucking the company to the hilt during the last few years. 

India's gold jewellery exports turn to uptrend

~By Siddesh Mayenkar

Thu Mar 20, 2014: Gold jewellery exports from India rose for the first time in the fiscal year last month, helped by better availablity of gold, and industry officials said this trend will gain pace in coming months with more banks importing.

India's jewellery exports had been hit by limited gold supplies after it curbed imports to bring down a current account deficit.

After falling more than 50 percent since the start of the year, jewellery exports edged higher by one percentage point in February to $718.36 million from a year earlier, the Gems and Jewellery Export Promotion Council (GJEPC) said.

"The comfort level of availability of gold has increased and more supplies will come with new banks coming on board," said Pankaj Kumar Parekh, vice chairman of GJEPC. He said the positive trend will continue in coming months.

India has allowed five domestic private sector banks to import gold. The move could boost supplies and bring down premiums for the metal in the world's second-biggest consumer after China.

Cumulatively, India exported $6.35 billion worth of gold jewellery in the first eleven months from April 2013, down from $11.67 billion.

"Things are a little better than last time as we are getting gold and even the American market is recovering," said Rajiv Jain, chairman and managing director of Sambhav Gems, which exports gem studded jewellery mostly to the United States and Europe.

Exporters will also eye the next policy moves from the federal government after the current account deficit eased from a record high hit in the year to March 2013.

The CAD, final figures for which are expected to come in the first week of June, is likely to fall to less than $40 billion for the fiscal year ending March 31 from its record $88 billion in the previous year.

"Next year should be good as far as exports are concerned. If there are favourbale changes in gold import policy that will help," said Jain. "At the last Hong Kong exhibition the response from gems and jewellery traders was good, further adding to hopes."

A trade fair for exporters was held in Hong Kong from March 2 to March 9. (Reporting by Siddesh Mayenkar; Editing by Anupama Dwivedi and William Hardy)

Courtesy: Reuters

Government starts easing gold import curbs

Mr Nilesh Parekh, Chairman, SGJHL,

[Editor: One of the biggest beneficiary of such a move will be Shree Ganesh Jewelry House India Ltd (SGJHL), because it is a 4-star export house. According to my sources, a hike in import duty can be passed through, by it is the import curbs which created problems for most of the export oriented Jewelry  houses. This bottleneck is expected to come down slowly as the UPA government brings in a serious of positive measures. Today, the scrip reacted positively to the news and closed at Rs.25.60 up 1.59%. Now, if a positive outcome comes on 24th March, 2014, the scrip could shoot and reach Rs.41-42 in no time. Because after it gets nod for the CDR Scheme, the company is likely to start its expansion plans once again. It is to be noted that the Hindu Business Line reported on March 19, 2012 that Shree Ganesh Jewellery House Ltd (SGJHL) bagged a 25-MW solar power project in Odisha, which is being executed by Kolkata-based Alex Green Energy in which the company holds a majority stake. Alex Green is co-promoted by the Sureka Group]

The government has allowed five domestic private sector banks to import gold, in what industry officials say could be a significant step towards easing of tough curbs on the metal imposed last year to cut the country's trade deficit.

The move could boost gold supplies and bring down premiums for the metal in the world's second-biggest consumer after China.

The Reserve Bank of India (RBI) has allowed gold imports by HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank, officials at the respective banks told Reuters.

Two industry sources confirmed the names of the banks. They and the bank officials did not want to be named as they are not authorised to speak to media.

India enforced the so-called 80/20 rule in July, making it mandatory to export a fifth of all gold imports. Under that rule, only six banks and three state-run trading agencies that had facilitated export of gold or jewellery in the past three years were allowed to import. The six banks were mostly state-run lenders.

The RBI has now permitted gold imports within prescribed limits by the private banks even though they had not facilitated any exports of metal or jewellery in the past three years.

"They have decided upon limits on quantities depending upon the number of (current) customers you have for exports," said Shekhar Bhandari, executive vice-president of Kotak Mahindra Bank.

The move to allow more banks to import gold may raise shipments to about 40 tonne per month from more than 20 in February, industry officials said. India used to ship in as much 70 tonne per month, the biggest import after oil that had pushed the current account deficit (CAD) to a record high in the year ended March 2013.

"Supplies will be smooth from now and I think premiums will come down," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation. "This looks like just a beginning to the further easing of 80/20 rule."

India used to be the No. 1 buyer of gold before the levy of a record 10% import tax in stages and other restrictions led to a sharp cut. Premiums hit a record of $160 an ounce in December, triggering smuggling and forcing industry officials to call for a repeal of the curbs.

Further major relaxations of the curbs are likely only after a new government is formed around June, officials involved with policymaking said.

Finance minister P Chidambaram said earlier this month the gold import duty could be revisited only after the final CAD numbers are out.

The CAD, final figures for which are expected to come in the first week of June, is likely to fall to less than $40 billion for the fiscal year ending March 31 from its record $88 billion in the previous year.

By that time it will also be clear who will form the government, after India's general elections that start in April. A senior policy official aware of the deliberations said the government and the central bank wanted to gradually remove the curbs as falling gold prices are expected to cut the CAD by $10-$12 billion.

"We don't believe in artificial kind of compression of current account deficit," the official said. "Since it was an extraordinary kind of situation and it was a policy option available, we tried that."

The official estimates India's gold imports this fiscal year to be around 800-850 tonnes, lower than last year's 950 tonne.

Courtesy: DNA India

WINNING STROKES: THINK DIFFERENT

As expected, today also Nifty tanked. During the market hours a sell in Nifty_Futures was given corresponding to the spot rate of around 6497 for a target of 6470 (spot) on the downside. The Nifty touched 6473.25 on the downside. The Paid Group Members might have made some money from this otherwise dull market, with some stocks spurting up due to sporadic news. Nifty which opened above 6500 today closed just above the immediate support levels. Now, with the Narendra Modi deciding to contest from Varanasi and Mr.Rajnath Singh trying to replace Mr.Tandon from Lucknow, the infighting in the BJP is getting stronger everyday. This is not all good for the Indian markets, which does not like uncertainty. 

A very bad precedence which was set by the top RSS leadership in connivance with Narendra Modi & Co is slowly snowballing into a some sort of crisis in the BJP, which I think will take the markets further down in the coming days. Also, now according to some media report, with Digvijay Singh emerging as a candidate to take on Modi, the Varanasi seat is looking be to slowly slipping away from the grip of the BJP. That is why Narendra Modi supporters are seeking additional seat for him in case he loses the Varanasi seat. 

In South Assam too, the condition of the BJP is very bad as the INC is likely to win both the seats from there, after a rumoured high valule deal with the AIUDF (of Badriuddin Ajmal). I commented earlier through repeated Facebook posts, that the BJP should tie up with AIUDF, when they could tie up with Muslim League in Nagpur, but then the BJP leadership thought otherwise. 

So, the BJP is not expected to get more than 4-5 seats from Assam. In West Bengal when senior leaders at present are talking about formation of Gorkhaland by breaking Bengal, then people are not expected to vote for the BJP. So, the BJP is not likely to get more than 2-3 seats from Bengal. 

Therefore, due to one wrong move by the RSS and Narendra Modi & Co, the whole equation is slowly changing against the BJP. And I would not be surprised if in the next opinion polls, the BJP's tally comes down to 170-180. 

The point is that the RSS and Narendra Modi & Co, should know how to respect the seniors in the party who sort of laid down the foundation stone of the BJP. Now, if they are humiliated in such a way, then it is  natural for people like us to feel very bad. 

Narendra Modi is a pure salesman and in Gujarat he is known to have anti--Industry image. Allowing such a person to become Prime Minister of India instead of L K Advani is a matter of great debate, especially after the way he dealt the Varanasi issue, shunting, Dr.M M Joshi to Kanpur. 

The Upper Caste Lobby (especially the Brahmins) of Uttar Pradesh might shift their allegiance to Samajbadi Party (SP) this time, due to initiatives taken by Akhilesh Yadav. 

India allows more banks to import gold in easing of curbs

[Editor: This could be the beginning of few measures, which the government of India is likely to take ease the scarcity of Gold in India. We are already witnessing some positive moment in the shares of Shree Ganesh Jewelry House (I) Ltd (Rs.25.80) today, which was strongly recommended in this blog. The company is likely to get approval for its CDR Package by the end of this week (meeting on 24th March, 2014), as the audit of the accounts have already completed by the consortium of banks, according to my close sources. The Paid Blog was already uploaded with this news couple of days back]

Wed Mar 19, 2014: India has allowed five domestic private sector banks to import gold, in what industry officials say could be a significant step towards easing of tough curbs on the metal imposed last year to cut the country's trade deficit.

The move could boost gold supplies and bring down premiums for the metal in the world's second-biggest consumer after China.

The Reserve Bank of India (RBI) has allowed gold imports by HDFC Bank (HDBK.NS), Axis Bank (AXBK.NS), Kotak Mahindra Bank (KTKM.NS), IndusInd Bank (INBK.NS) and Yes Bank (YESB.NS), officials at the respective banks told Reuters.

Two industry sources confirmed the names of the banks. They and the bank officials did not want to be named as they are not authorised to speak to media.

India enforced the so-called 80/20 rule in July, making it mandatory to export a fifth of all gold imports. Under that rule, only six banks and three state-run trading agencies that had facilitated export of gold or jewellery in the past three years were allowed to import. The six banks were mostly state-run lenders.

The RBI has now permitted gold imports within prescribed limits by the private banks even though they had not facilitated any exports of metal or jewellery in the past three years.

"They have decided upon limits on quantities depending upon the number of (current) customers you have for exports," said Shekhar Bhandari, executive vice-president of Kotak Mahindra Bank.

The RBI did not immediately respond to a request for comment.

The move to allow more banks to import gold may raise shipments to about 40 tonnes per month from more than 20 in February, industry officials said. India used to ship in as much 70 tonnes per month, the biggest import after oil that had pushed the current account deficit (CAD) to a record high in the year ended March 2013.

"Supplies will be smooth from now and I think premiums will come down," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation. "This looks like just a beginning to the further easing of 80/20 rule."

NEW GOVERNMENT, NEW RULES

India used to be the No. 1 buyer of gold before the levy of a record 10 percent import tax in stages and other restrictions led to a sharp cut. Premiums hit a record of $160 an ounce in December, triggering smuggling and forcing industry officials to call for a repeal of the curbs.

Further major relaxations of the curbs are likely only after a new government is formed around June, officials involved with policymaking said.

Finance Minister P. Chidambaram said earlier this month the gold import duty could be revisited only after the final CAD numbers are out.

The CAD, final figures for which are expected to come in the first week of June, is likely to fall to less than $40 billion for the fiscal year ending March 31 from its record $88 billion in the previous year.

By that time it will also be clear who will form the government, after India's general elections that start in April. The main opposition Bharatiya Janata Party - the favourite to win the polls - has already spoken against the gold import restrictions.

Its prime ministerial candidate Narendra Modi has said that any action on gold should look at the interests of the public and traders, not just economics and policy.

A senior policy official aware of the deliberations said the government and the central bank wanted to gradually remove the curbs as falling gold prices are expected to cut the CAD by $10-$12 billion.

"We don't believe in artificial kind of compression of current account deficit," the official said. "Since it was an extraordinary kind of situation and it was a policy option available, we tried that."

The official estimates India's gold imports this fiscal year to be around 800-850 tonnes, lower than last year's 950 tonnes.

(Additional reporting by Rajesh Kumar Singh in NEW DELHI; Editing by Krishna N Das and Muralikumar Anantharaman)

Courtesy: Reuters

WINNING STROKES: THINK DIFFERENT

Nifty is near at all time high, but there is  not much movement in the broader market, which is increasing the skepticism of the continuance of this rally. Moreover, the BJP has probably BLUNDERED by deciding to field Narendra Modi from Varanasi after showing Red Card to its veteran leader Dr. M M Joshi, just to satisfy the wishes of the woolly headed RSS leaders.  I have repeatedly mentioned in my Facebook posts not to do this, but then "Vinasha Kale Vipareeta  Buddhi" (meaning that when the ruler faces bad times, his thinking also gets warped). I strongly feel that unless the BJP changes its stand, the caste game could go against it in Varanasi (Benaras) and Narendra Modi (an outsider) could actually lose this seat, especially if:
(i) Mr.Arvind Kejriwal decides to contest from there, 
(ii) Mukhtar Ansari decides NOT to contest on Kaumi Ekta Dal ticket, and 
(ii) If the Congress decides to field Dr. Rajesh Kumar Mishra again.
It is because, out of around 665,490 plus voters, Muslims have a solid 3 lakh plus vote bank in Varanasi (Benaras); Backwards, Patels and Brahmins are other key vote banks. Today there was an article in Economic Times which said: "As he (Arvind Kejriwal) announced that he was going to defeat Modi, the crowd roared, "Abhi to Sheila hari hain, Modi teri bari hain (Sheila has been defeated. Now it is Modi's time)". This shows where the votes of a large section of Indians will go. The fact of the matter is that: the manner in which the veteran politician, Dr.M M Joshi was forced to retreat from this seat could dramatically change the (caste) equations. In the UP caste is a very important factor during elections and the Upper Castes, especially the Brahmins have always voted tactically, trying to remain at the centre of power. Besides, the way Rashtriya Swayamsevak Sangh (RSS) and the BJP humiliated a senior party functionary has shamed even the illiterates of the illiterates. If this called Modi-wave, then I would rather prefer stay away from the party which supports such anarchy! This makes the chance of NDA returning more an d more uncertain--the markets have reacted accordingly. Also, it is to be remembered that the market traded range bound during last week. Inability to cross 6560-6570 range today shows the tiredness of the bulls which was expected when the morning report sent to the PAID GROUP. It was mentioned today that a fall below 6530 could start, another round of sell offs by the fatigued-bulls. After reading, today's inputs in the Paid Blog, those who shorted the Nifty_Futures corresponding to the Nifty (Spot) rate of 6545.45 (This was the value of Nifty at the time of sending the report), might have made decent money intra-day. 

Resistance: 6530 / 6550

Support: 6475 / 6450

In the stocks to watch section (of the today's' report) it was mentioned today that: Financial Technology, has entered an agreement with IVF Trustee Co Pvt Ltd to sell its warehousing arm for Rs.242 Cr. The stock hit the upper circuits at Rs.378.95.
Glodyne Technologies Ltd (Rs.5.97) and Allied Digital Services Ltd (Rs.11.75) fared badly today in the bourses, as expected. The promoters have eaten both the companies hollow and now only skeletons are left. Exit both the scrips on any rally, as there are better bargains elsewhere, at the present moment. It is amazing why the regulators are not taking any action against these kinds of companies, inspite of them, ruining the confidence of the investors, in the small and mid cap space. 

BULLION: BROKERAGE REPORT

Bullion counter may extend its upside momentum amid ongoing tensions between Russia and Ukraine, which resulted in safe haven buying.

Escalating tension in Ukraine will remain in focus for the bullion investors in the near term. Global ETF demand along with strong Chinese demand is also lifting the prices. Gold advanced 14% this year on demand for a safe haven as turmoil in Ukraine hurt emerging market assets already weakened by cuts to U.S. stimulus, while growth slowed in China, the largest consumer. Recently, President Barack Obama and Chancellor Angela Merkel have warned the ballot has no international legitimacy. Gold may move in the range of 30000-31200 in MCX while white metal silver can hover in the range of 45500-49500. 

The gold/silver ratio has moved up from 60 to 64.5 which showed that gold outperformed Silver recently. This ratio can hover in the range of 62-66 in the near term. Holdings in the SPDR Gold Trust increased to 813.3 metric tonnes yesterday the most since Dec. 20. 

The yellow metal rebounded this year, even as the U.S. Federal Reserve, which next meets March 18-19, announced reductions of bond buying in each of its past two meetings. Last year, COMEX gold slumped by 28 percent, the most since 1981, amid a U.S. equity rally to a record, muted inflation and speculation that the Federal Reserve would taper monetary stimulus. Meanwhile, physical buying, particularly out of Asia, has been subdued at best for the past few weeks.

FAKHRI H SABUWALAS ARTICLE

Satta Baazaar is hot and punters are betting on the ascent of NaMo raaj at New Delhi. Betting though illegal it’s on says the market grapevine. A leading pink paper says any bets for AK {arrey Arvind Kejriwal} as PM? A winning wager of Rs 1 lac shall win Rs 5 cr but for NaMo the same shall win Rs 1.42 lac. This is indicative of what the popular feeling is and which side the wind blows.

At Dalal Street the benchmark and its movements show the political shaping up. The Opinion polls on display at the leading television channels give NDA an edge and marginalise the Congress and AAP. The market sways between ups and downs but the powerful force of FII inflows and confidence of foreigners in BJP's right to the centre policies is at work.

The economy has bottomed out for sure as it is evident from the Q3 results and also from the visibility of the activity in the overall economy. The shrinkage in current account deficit augurs well for the economy. 

Consequent to that the strengthening of the Rupee is one solid factor favouring teji. FII's inflows remain the beacon on the path of tejibut a general consensus developing in favour of the Indian economy amongst all the Emerging markets is a great plus. The softening of crude prices and strengthening of dollars is going to further help in bringing down the current account deficit. It may momentarily be a dampener for the export business but even the current dollar rates are in no way a dampener for EOUs.

Some degree of consolidation is essential and the market will be positive in the medium term. A move higher without a healthy consolidation may tend to be risky. A dip below 6400 may not be ruled out but post such a correction it is likely to rule ahead. The benchmark heavyweights are in reaction mode and some of them like SUNMaruti, M&M Gail Acc etc have already moved up smartly from their interim lows.

It would be prudent to enter on corrections and if the market does not react then selling on unchecked rise is the order of the day.

Gold premiums erased by higher prices, seasonal factors

~ by Eddie van der Walt

Commerce and Industry Minister Anand Sharma 

March 15, 2014: Premiums paid for physical gold continued to fade after the metal rose to its highest price in nearly six months on Wednesday, leading some to question the sustainability of the rally. 

The metal reached it most expensive since September 20 at $1,368.85 per ounce on a combination of worries including geopolitical tensions in Ukraine, a perceived slowdown in the Chinese economy, dollar weakness and a sharp sell-off in the non-ferrous metals. 

And it was last still around this level at $1,365.75/1,366.55 per ounce, up $18.45 or nearly 1.4 percent from the previous close. 

As with most price rises, premiums paid for the metal have fallen, with price-sensitive physical buyers holding back to see how the various situations play out. 

"The physical market has quietened down a lot in recent days," one trader said. 

In India, premiums were reported as low as $60 for 1kg bars over London spot, although traders told FastMarkets that other factors are also playing a role in local market dynamics. 

First, with the wedding season now over, gold is entering a period of lower demand so jewellers would therefore be less pressured to build up depleted stocks. 

Second, there are growing expectations that the Indian government is on the verge of scaling back its tough import restrictions, with sources telling The Bullion Desk that they believe the controversial 80:20 rule may be repealed "within weeks". 

The rule, which is aimed at reducing imports of the metal and thus helping to curve the current account deficit (CAD), specifies that new gold imports are not allowed until 20 percent of previous shipments are exported as jewellery. 

But jewellers staged earlier this month a one-day strike against this measure as well as high taxes on imports, which have also been blamed for an increase in illegal gold imports. 

And with a general election fast approaching - it will be held during April and May - and the CAD improving, there is pressure on the government to repeal this rule. 

In China, premiums - recently as high as $15 over spot - have completely dissipated, with the metal now at a $3 discount. 

But with China the only actively buying market, the discount may not be a reflection of weak demand but rather of a flood of imports as sellers dump their gold there, traders said. 

In other locations, Hong Kong was quoted at $1, down from nearly $2 recently, while Singapore dropped to about 80 cents over spot. 

(Editing by Mark Shaw) 

Note: This is a delayed version of the report that appeared on FastMarkets' subscriber-only website on March 12 - all information is correct as of that date

Courtesy: www.fastmarkets.com

Gold: Outlook Looks Bullish
~~by Sean Brodrick

Friday, February 14, 2014: What happens when an irresistible force meets an immovable object? We're about to find out in the gold markets.

The irresistible force is Chinese gold demand, which is surging along with its price. Gold flirted with $1,300 on Thursday. (Much higher demand from India could be coming shortly, too.)

The immovable object is Wall Street's bearish view on gold, a view that hardened after gold plunged 28% last year. Wall Street hates gold with the white-hot heat of a thousand suns.

But I think Wall Street is about to get blown away. And not just because gold hit a three-month high on Tuesday.

A chart of gold prices shows that the metal has fallen very far - but there are signs to give the bulls hope. We can see a double-bottom is in place. Gold broke its weekly downtrend.

I'd say the technical picture is improving even as bullish fundamentals line up for the next push higher.

They include: 

(i) Renewed Buying From China

China's gold consumption jumped 41% last year to 1,176.4 metric tonnes, according to data from the Chinese Gold Association. "Chinese consumer demand is unprecedented," one dealer said in news reports.

Jewelry demand climbed 43% and bullion demand soared 57%.

Consumer sales surged by at least 20% in December 2013 from a month earlier and were up 15% compared with the same period in 2012.

China's 2013 gold imports from Hong Kong more than doubled from the previous year, even though its own mines are producing at record rates.

An End to Selling of Gold by ETFs?

Assets in bullion-backed exchange-traded funds shrank 33% last year. All that metal rushing out of the funds weighed heavily on gold prices.

China bought most of the gold that the funds sold, and doesn't seem eager to give it back.

But ETF selling has slowed to a trickle. Gold ETF outflows slowed 76% from December to January, according to data from ETF Securities.

What's more, the end of January saw gold ETFs experience their largest inflows in a year.

It's still early in the year, but if the funds are done hemorrhaging yellow metal, that lifts a huge weight off the market price.

Yellen Puts Wings on Gold

New Federal Reserve Chairwoman Janet Yellen appears for the moment to be following the easy-money path laid by predecessor Ben Bernanke. And that's good news for gold.

Although she said tapering of the bond-buying program is likely to continue, she also signaled there is no preset course for the scale-back of quantitative easing. That statement helped gold rally this week.

India May Lift Restrictions on Gold Imports

Last year, India's gold imports soared. In fact, the trend was blamed for pushing India's current account deficit to a record.

So the Indian government hiked duties on gold imports three times last year, to a record 10%. It also dictated that a fifth of all imports of gold be shipped out.

Since India was 20% of global demand in 2012, these actions pushed gold prices lower last year. Indian gold imports probably fell 70% in the final quarter of 2013.

These policies have reduced India's current account deficit, as intended. But it's also ruining India's jewelry business.

Many experts expect India to ease restrictions on imports after the official current account deficit is released next month.

There are other forces at work, including a potential strike at gold mines in South Africa and booming gold coin sales in the U.S.

Could gold prices go lower? Yes. But it darned sure looks like the bottom is in. If that's the case, gold miners, which have been beaten into the dirt, are now bargains.

Courtesy: Investment U

WINNING STROKES: THINK DIFFERENT

As expected, the Nifty tanked today in the early trade to 6432.70 levels as profit booking set in from the overbought positions. Those who have shorted the market yesterday must have made further money today in Nifty_Futures. However at the end of the day, the Nifty managed to eke out a gain and closed at 6,504.20, up 11.10 points. What is more satisfying is to see the Nifty_Spot conquering 6500 levels once again. Time and again the level of 6470--6480 is providing a strong support level for the bulls which is heartening. Today also, while the FIIs were net buyers to the tune of Rs.982.19 Cr, the DIIs were net sellers of Rs.866.42. This raises the general question as from where so much selling is coming months after months from the DII front!! 

Entegra Ltd hit the buyer Freeze and closed at Rs.3.45. The stock had been strongly recommended as a buy, in this blog. Yesterday, I presented some link to attest my argument that the scrip is definitely going to give superb returns going forward. 
Today, the shares of both, Allied Digital Services Ltd (Rs.11.92) and Glodyne Technoserve Ltd (Rs.6.28) tanked. While the SEBI is busy with Sahara India Ltd, it probably forgot to nail the promoters of these two listed companies, who are enjoying their joyous ride in the company. Anyway, everyone knows how this regulator of the Indian Market Works--so no hope for them to act. 

Why gold smuggling is on the rise in India

Over 85% of gold imports in India are in jewellery

14 March 2014: Indians traditionally hoard gold in the belief it will bring financial security. Now India, the world's largest consumer of gold, is seeing a record rise in smuggling, reports Shantanu Guha Ray.

An estimated 700kg of gold is smuggled into India every day.

Officials at India's Financial Intelligence Unit (FIU) say the country has not seen such a sharp rise in contraband gold for two decades.

They claim smugglers are using innovative ways to bring in the metal illegally.

Sometimes gold is melted into seed-shaped chips and hidden in dates from Dubai, or ground into granules and mixed with other metals to look like ore. The metal is also being converted into gold belt buckles and torch batteries.

The smuggling is becoming increasingly difficult to contain, admit regulators.

Officials from the Directorate of Revenue Intelligence say smugglers are regularly using the air route, taking advantage of airlines that club international routes with domestic ones using the same flight.

'Unprecedented'

First, carriers smuggle gold abroad and hide it in the aircraft, while another set of carriers board the same flight on the domestic route and walk away with the consignment.

"This is unprecedented and unbelievable. A new industry has emerged in India - it is a very dangerous situation," says Konal Doshi, a top official at the Gems and Jewellery Export Promotion Council (GJEPC), a Mumbai-based body of the Indian Commerce Ministry.

According to his figures, smuggling rose by almost 300% between March 2013 and April 2014.

Triggered by a rise in duty on imports of gold jewellery introduced in June last year, smuggled gold worth 2,500m rupees ($41.18m; £24.75m) was confiscated at various ports and airports between March and December last year, up from 500m rupees during the same period in the previous fiscal year.

Last year, the government hiked the import duty on gold three times, eventually to 15%, to curb demand for the precious metal and rein in a widening current account deficit that had touched a record high of $88bn (£53bn) in 2012-13.

A current account deficit is the difference between inflow and outflow of foreign currency and occurs when imports are greater than exports.

The government now expects the deficit to fall below $50bn in the current financial year, ending 31 March.

Gold imports, which had peaked at 162,000kg in May 2013, came down to 19,300kg in November after the government hiked the duty.

But the smuggling of gold, mainly from Dubai and Sharjah, where the metal is cheaper, is on the rise, authorities say.

The GJEPC has asked the finance ministry to slash the import duty on gold. Sonia Gandhi, the president of the ruling Congress party, has also written a letter to the commerce ministry seeking the removal of the curbs.

'Back to the 1990s'

But Delhi is not keen to cut the duty yet.

"At present, there is no proposal under consideration," Minister of State for Finance JD Seelam told parliament recently.

The main opposition Bharatiya Janata Party says the government has reintroduced controls that were previously dropped by Congress in 1993 in order to curb smuggling and money laundering.

"But we are back to the 1990s. Gold is being smuggled in from our neighbouring countries," senior BJP member and former finance minister Yashwant Sinha says.

DRI officials admit that less than 1% of the contraband gold is confiscated by law enforcers.

"The move to increase import duty is not working. In India, everyone - even the poorest of the poor - invests in gold. This move can only work if all the smuggled gold is confiscated by the regulators," says economist Surjit Bhalla.

But that looks like a near impossible task.

Shantanu Guha Ray is a Delhi-based journalist.

Courtesy: BBC News

Mr.Finance Minister: Blame it on Gold imports: 

A significant factor that aided the narrowing of CAD is the economic slowdown in the country. Contraction in demand for goods and services meant under-utilisation of existing capacities.

Contraction in import of these five items translated into savings of $10.5 billion in foreign exchange outflow – almost three-quarters as much as savings on gold imports.

It must be pointed out that revival of exports, growing at a modest 5.5%, also eased some pressures on the trade deficit, making CAD look prettier.

However, the narrowing of CAD can get reversed if businesses start investing again and consumer demand rejuvenates in the next few months even if much of the curbs on gold imports stay

Courtesy: Tina Edwin, in http://www.indiaspend.com

WINNING STROKES: THINK DIFFERENT

Today as expected the Nifty tanked just after my report to the Paid Service Members delivered on the Premium Blog in the late hours of trade. It was clearly mentioned that, a though a break-out above 6400 has put Nifty into a new orbit of no resistance zone, but its inability to cross 6560 for third day in succession could point out to the fact that a strong resistance exists at this level. The report in the Paid Blog further mentioned that: 'At present the Nifty (spot) is just below the immediate resistance at 6545. The traders are suggested not to for Nifty longs unless it clears the resistance zone of 6560-6565 (Nifty Spot)'. Therefore, those Paid Members, who shorted the Nifty corresponding to 6543 (this was the spot level at that time) of Nifty_Spot might have made money today also. Another thing which is worth noting is that though the indices came down at the end, but the FIIs turned net buyers of Rs.616.62 Cr today also, though as  usual, DIIs turned net sellers to the tune of Rs.314.4 Cr. It really surprises me to see, DIIs' sell figures everyday---the question which haunts me is: from where is so much selling coming from the domestic institutions??!!

Glodyne Technoserve Ltd hit buyer freeze, but later closed at Rs.6.60, just a tad below the freezing limit of Rs.6.61. The sources says that the company is taking measure to improve the bottomlines--but God knows what the promoters are doing, other than giving out empty promises. The investors should exit the scrip when it touches Rs.14-15, in the next rally. There is no need to stay invested in the shares of company, where the PROMOTERS are of this CATEGORY. 

Shree Ganesh Jewelry House (I) Ltd (Rs.25.55) today closed in the Green inspite of market coming down at the end on the twin hopes of getting the required nod from the consortium of banks for its CDR Scheme and also on the optimism that the Commerce Ministry is working in tandem with the FMO, to find out a viable solution to ease Gold import restrictions. Meanwhile, All India Gems and Jewellery trading body chairman Haresh Soni told the Bullion Desk earlier this week that he is hopeful that there will be a change to the 80:20 rule within weeks. You should buy the scrip and keep holding. This will definitely give you good returns over a period. 

Entegra Ltd, also hit the upper freeze today before closing at Rs.3.39. According to the sources, the three turbines of Entegra Ltd’s 400 MW Maheshwar Hydro Power Project are likely to start whirring by 30 June 2014. The investors should continue accumulating the counter on all declines. 

Time for Rethink on Import Duty on Gold

13th March 2014: Gold demand in India is expected to be robust in 2014 and is likely to encourage an increase in smuggling if curbs on bullion imports remain, the World Gold Council (WGC) has said. Ignoring this warning, the government has tightened norms for Indians bringing gold into the country following a spurt in smuggling and pressure on inward remittances as overseas workers prefer to bring their savings in gold. In a recent interview, the chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, has justified high customs duty, adding that there is a higher customs duty on other luxury goods. This argument does not hold water.

Gold should not be seen purely as a luxury good. For many it is seen as a crucial hedge against inflation, in the absence of deep and trustworthy financial markets. Secondly, unlike other luxury items such as Mercedes cars, gold is easy to smuggle. The memory of the 1970s and 1980s, when smuggling of the yellow metal thrived, should serve as a warning against continuing with a 10 per cent import duty on gold imports. A prohibitively high duty on gold imports should not be considered a semi-permanent measure. This would only incentivise smuggling, with the consequent costs in terms of criminality. Sound economic thinking requires that the government set a duty for gold by comparing it not to “luxury items”, but in a way that the profits from smuggling large amounts of gold do not outweigh the costs. By some estimates, 150 to 200 tonnes of gold have already been smuggled in. Smaller neighbouring countries have also seen a spike in their gold imports, a sure sign that smuggling into India is on the increase. It is vital that gold duties come down to a more reasonable level before these incipient smuggling networks become entrenched.

It is time for a rethink on the import duty on gold. The rampant smuggling would predictably come down once gold duty is cut. But if the finance minister statements are anything to go by, this is unlikely to come about at least in the time preceding the general elections.

Courtesy: The New Indian Express

Jewellers ask govt to temper tax demand

MUMBAI, MARCH 12:  The All India Gems and Jewellery Trade Federation appealed to the government not to target its members for higher advance tax.

In a letter faxed to Union Finance Minister P Chidambaram, the Federation has requested him to hold back the revenue department officials from going after jewellers across the country for payment of enhanced advance taxes based on last fiscal year earnings.

Haresh Soni, Chairman, GJF, told Business Line: “We have received complaints from our members particularly from Chennai, Bangalore, Mumbai and Gujarat claiming that the income tax department is pressurising them to match their last year’s advance tax payment so that the department can at least reach close to the target set by the government.”

It is difficult to pay advance taxes at the rate of last financial year’s income since the overall business of gold jewellery trade is down by 40 per cent, he said.

“We want the department to consider the advance tax payment on realistic figures as declared by member assesses. We are willingly to pay the taxes based on our declared income for the year,” said Soni.

The government's gold control rule has resulted in lower than expected turnover by the Indian gems and jewellery industry and the insistence of additional payment of advance taxes by revenue officials has impacted the overall morale of the business very badly amid a period of gloom on the economic front, he said.

The gem and jewellery contribution to overall export is expected to fall to 15 per cent this year compared to 17-18 per cent achieved last fiscal. The domestic jewellery trade is pegged at Rs.2.5 lakh crore, which is down by about 30-40 per cent, said Soni.

Advance tax is a system of staggered payment of income-tax over four quarters, and is generally considered as a barometer of a company’s performance during a quarter.

The government has restricted import of gold in a bid to bridge the widening current account deficit. This has impacted the availability of gold at reasonable cost for jewellery makers and dampened the sentiment of jewellery buyers in most quarters of the financial year.

Courtesy: The Hindu Business Line

Government working for relaxation of curbs on gold imports: Commerce Secretary

Only hope for the Gems & Jewelry Sector

12 Mar 2014: "We are in the mid of March. We have been in conversation with the Finance (ministry)...surely we are working towards a possibility of relaxation," Commerce Secretary Rajeev Kher told reporters here.

    

He was replying to a question whether the government is considering relaxing gold import restrictions.

    

Gems and jewellery exporters, who contribute to about 15 percent of the country's total shipments, are demanding for the relaxations saying the curbs are impacting the exports.

    

Gems and jewellery exports dipped 4.18 percent to USD 3.59 billion in February. During the 11-month period of the fiscal, the shipments declined by 7.15 percent to USD 35.73 billion. Gold and silver imports declined 71.4 percent to USD 1.63 billion in February.

The government had increased customs duty on gold to 10 percent and banned import of gold coins and medallions, while the RBI linked imports of the metal to exports.

India is the largest importer of gold, which is mainly utilized to meet the demand of the jewellery industry. Imports stood at about 830 tonnes in 2012-13.

    

Commerce and Industry Ministry has said that over- regulation is encouraging smuggling of the yellow metal. In 2013, the value of gold bars and biscuits seized amounted to Rs 271.15 crore.

Courtesy: Jagran Post