Gold worth $2.1 bn imported within nine days of demonetisation

The demonetisation move seems to have brightened jewellers’ fortunes with many of them selling gold at 40-60% premium against accepting the banned currency notes.

Even after the note ban, gold imports have been strong.

According to estimates by GFMS Thomson Reuters, gold worth $2.8 billion has been imported in the first 17 days of November. Of this, $2.1 billion worth of gold was imported nine days after demonetisation.

In November last year, 98 tonnes of gold valued at $3.54 billion was imported. In October 2016, imports stood at 84 tonnes worth $3.5 billion.

Bullion traders are giving multiple reasons for this. First, the gold market has been destabilised. While gold sold soon after demonetisation was being replaced to meet marriage-season demand, there were income-tax raids on many jewellers who were using demonetisation as an opportunity to make money.

Donald Trump’s victory in the US presidential election was considered a bullish sign for gold, too. However, in a few days after his win, gold prices started falling sharply and traders placed further import orders at lower prices. The government announces tariff value for gold at which import duty is calculated for the next fortnight and this is based on a formula and, hence, transparent. With prices falling, traders calculated that the tariff value of gold to be announced on November 15 would be lower. The tariff was set at $394 per 10 gm, which was 4.8% lower than the tariff on October 31, and good volumes of gold valued between $800 million and $1 billion are estimated to have been cleared on November 16, according to trade sources.

There are no estimates available on how much gold was sold against old high-value currency notes because now, the practice of laundering black money has spread and even professionals are adopting those tactics.

Due to a sharp inflow of gold in the past few days, some orders which were not delivered might have been cancelled. “This is because prices fell further on Thursday and Friday,” said a source in the know.

The government has started issuing notices to those who have deposited high amounts of cash. In such cases, clarity is emerging that selling gold against old currency notes with pre-dated billing practices will stop.

READ OUR FULL COVERAGE ON THE MODI GOVT'S DEMONETISATION MOVE