Political Economics 101: Explosion In Indian Gold Smuggling

There is no official data on Indian gold smuggling like there is for gold imports, but there is overwhelming evidence that smuggling is now becoming the preferred route for gold supplies. It is also apparent that Indian officials are not only compliant in continuing the gold import tax scam, but are participating in the crime business of smuggling — a classic case of political economics 101. Now wonder Dubai is emerging as one of the biggest unsung importers in the world.

The number of instances of gold smuggling at two airports in Mumbai alone have increased over six times this year, with the customs department recording as many as 497 cases in the four months since April. During the same period last year, there were 79 cases. And there are thousands of miles of porous borders in India. For gold investors, it doesn’t matter what method India chooses to acquire gold, it is all the same in the end. Under such circumstances, official Indian import numbers should be largely ignored.

After the latest Crimex gold attacks, China picked up the pace at 884,700 ounces on Monday, Tuesday and Wednesday.3.59 tonnes were added to GLD Monday and Tuesday. The silver open interest for September actually rose by 212 contracts to 65,809 with one and a half weeks to first-day notice. There are some who think these contract holders are proxies for China, which will blow this crooked market sky high. The manipulators can run but they can’t hide.

Adding to their problems: The Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter. Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market. The zone will have a vault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets.