We’ve established that India has a strong hunger for gold. And when one small change in its demand occurs, it instantly changes the gold price level.
You see, the price of gold tends to rise during the September to December period. This is because it’s the height of India’s wedding season and the Diwali festival – Where gold is used in abundance for weddings, gifts and jewellery.
During May to August last year, India’s currency lost a colossal 20% against the dollar. This poor exchange rate sent the gold price in India flying up 35%.
India was buying so much gold that it pressured the country’s current account deficit.
The government was frantic. They had to do something to cut the nation’s hunger for gold.
They tried import duties. Then they increased these duties another three times to 10% last year. Then they raised gold jewellery import duties from 10% to 15%. They imposed a law where a minimum of 20% of all gold imported had to be exported before you could import more.
The Indian government’s actions cut gold demand by 30%.
The thing is, these laws are going to change…
India’s real demand will send the gold price to new levels
The country’s going through a change in government and its laws. It’s new president Narendra Modi is pro-gold.
A senior minister official said the government will probably cut the gold import duty by about 2% to 4%. This will have a massive impact when you consider the fact that the duties are at 10% right now.
In fact, Reuters even said, “Gold imports by India, the world's No. 2 bullion consumer after China, could double from current levels if the restrictions are eased, according to an industry estimate.”
So you need to get into gold now before these coming changes occur.
And the best way to do this is by investing in gold ETFs like Absa Capital’s NewGold ETF. For more information about this ETF, visit www.etfsa.co.za
Thrive in your possibilities,