While there was craving for Gold to get rid of the old notes, now there are rumors that PM might look at the Gold. There is panic among the Gold traders that the BJP government might hit at the Gold imports. The Gold prices and the movements of imports have increased significantly after the ban on notes was announced by the PM on 8th.
Some Indian gold traders are placing bulk, short-term import orders on fears that Prime Minister Narendra Modi might soon add curbs on overseas purchases of the metal to his withdrawal of high-denomination banknotes in his fight against black money, traders and jewelers said.
India is the world’s second biggest gold buyer and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by people in cash that don’t appear in any official accounts.
PM Modi has said he may not stop at the shock currency move that has led to a massive cash shortage, but has not made clear what his next step would be in his drive to uncover the untaxed wealth. That uncertainty is likely to create sharp swings in purchases, affecting world prices.
“We’re uncertain about what the government will do next,” said Daman Prakash Rathod, a director at MNC Bullion in Chennai. “No legal business trader is willing to risk very big quantity. (Some) want to buy 2-3 kg extra so that in future they could conduct their business for a month or two until the situation is sorted out.”
Panicked gold traders and jewelers have circulated messages amongst themselves saying the government could ban import of gold for domestic use from early next year to March, according to several jewelers in New Delhi and Mumbai who have seen the message. India’s ongoing wedding season – traditionally a focus for gifting gold – is fueling the disquiet.
The All India Gems and Jewelry Trade Federation dismissed the messages among traders as a rumour, but some are nevertheless buying extra gold for the wedding season and to see themselves through the next few months, said an official with the India Bullion And Jewelers Association.
Modi already has hinted that he will do some more things to curb the black money flow in the country and hitting at Gold could be the next step.
