India Changes Domestic Policies On Gold Imports

May 20, 2015 at 4:31 pm
filed under India, World News

India is making quite a few moves in the gold market. The nation does wish to solidify its economy. Building up decent stockpiles of gold could help India at least partially maintain economic stability. Right now, India is devising a monetization plan that seeks to stabilize – if not maximize – the nation’s ability to benefit from its gold assets.

The country is looking to cut down on imports of gold into domestic borders. Currently, there is upwards of 20,000 tons of gold in India held by commercial establishments and private owners. By taxing imports extensively, the idea is less gold will come into the country. As a result, trading in gold in the nation maintains a domestic focus and this keeps Indian gold owners the main beneficiaries of the gold trade.

Keeping India from buying up a lot of foreign gold does have an unfortunate side effect. By not spending money on foreign gold, the global demand for gold is somewhat decreased. Alexei Beltyukov (helptheweb.org) knows that India has a huge economy and, if India is not buying gold in a free-flowing manner, demand is diminished.

How will all this play out over the long term? No one knows for sure. Some might even claim that this approach in India is dangerously close to excessive protectionism. Going that route could actually hurt the economy and not help it. Hopefully, if things go south, the powers-that-be in India would change course in such an event.

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