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Indian Gold Imports Remain Robust Through the 3rd Quarter

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Indian Gold Imports in 2017 Pass 2016 Annual Total in September.

Indian Gold Imports

India’s gold imports remain strong through September. Indian gold imports have run ahead of 2016’s and passed full year 2016 totals in September.

Through September, India has imported 667 tons of gold or approximately 21.4 million ounces. At the current pace, India would import about 1,000 tons of gold in 2017 or about 35.27 million ounces or about 40% of the annual global gold mining production of about 2,500 tons a year.

Indian gold imports 2016-17 september

Here is a chart of Indian gold imports for the first nine months of 2016 compared to 2017. Since India has virtually no domestic gold mining production, gold imports are a good proxy for gold demand in India.

Indian gold imports 2016 vs 2017 by month through September

Through September 2017, India has imported approximately 667 tons of gold vs 332 tons imported through September 2016, a 101% increase year over year.

India has had a culture affinity with gold for thousands of years. India’s growing population and increase in income levels has created large and steady annual gold demand in the sub-continent over the past decade.

Indian Gold Imports 1999 - 2017 through September

Indian gold imports are on pace to be approximately 1,000 tons in 2017.

India’s 2017 imports through September of 667 tons eclipse the 557 tons of gold on the Bank of India’s balance sheet. Analysts estimate the amount of gold in private Indian citizens’ hands and temples to be approximately 18-22K tons.

Gold reserves by central Bank top 10 through November

Indian central bank gold reserves are tenth among individual nation central banks.

Reasons for increase in Indian Gold Demand in 2017

Gold demand in India has increased in 2017 largely due to pent up demand from 2016. Last year, gold imports were down the first half of the year in part due to the spike in gold prices in the run up to the Brexit election. Indians tend to buy more gold when prices drop and hold off on purchases when the price of gold rises. Also at the end of 2016, the Indian government demonitized about 90% of their paper currency, leaving many Indians without cash to make purchases, including gold. Earlier this year India completed its issuance of new currency and Indians were able to use that cash to make gold purchases that they were unable to make at the end of 2016.

Gold demand was also driven higher earlier this year as jewelers and gold dealers stocked up on gold in anticipation of a rollout of the Indian goods and services tax that was anticipated to be 5% for gold bullion. The goods and services tax was finalized at 3% for gold bullion and rolled out in July.

Demand is expected to be strong in the second half of 2017 as a good monsoon season this year has helped rural Indian farmers’ fortunes who traditionally buy gold with the excess farming profits.

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This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.