Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

Gold import curbs backfired?
Thu, 25 Jul Pre-Open

The global rating agencies were the first to point it out. But ever since the government started worrying about the ballooning current account deficit (CAD) problem, it started seeing red in India's appetite for the precious yellow metal, gold .

Since then, the Reserve Bank of India (RBI) too is taking various measures to tighten gold imports. Here again the attempt is to stem the fall of rupee against the US dollar. Recently, the RBI implemented new norms to regulate gold imports into the economy. As per the announcement by the central bank, 20% of imports must be utilized for overseas sales. Further, the importers will have to retain 20% of the imported gold in customs based warehouses. Also, they will only be able to buy more after exports equivalent to 75% of the retained amount of gold has been shipped. It is also important to note, the said restrictions are now applicable to unrefined gold also. This is likely to address the loophole in import duty, which was hiked on the refined gold only. Having said that, will these measures be helpful in addressing the economic issues?

The gold jewelers and gold loan companies were not the only ones to be impacted by the new norms. The economy as a whole may have to bear the brunt of the government's pessimistic views on gold.

An per article in Business Standard, there have been increasing instances of gold smuggling in India and neighboring countries, including Nepal, that have put restrictions on gold imports. Now that makes the government's worst fears come true.

The restrictions may control the regulated gold import market. But the heightened activities in the unregulated markets might only defeat the purpose of restricting gold imports.

Moreover such restrictions cannot possibly help investors abstain from buying gold for their portfolio. The Finance Minister, has been repeatedly requesting Indians to avoid investing in Gold. But with the debasement of currencies and risk of inflation gold is unlikely to lose its lure too soon. Gold had witnessed positive trend in 2012 , the same has continued into 2013 as well. Though, the pace has slowed down, it continues to be a safe haven asset in uncertain times. Given that the curbs on gold imports are actually backfiring, the government and the RBI may want to reconsider their decisions.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Gold import curbs backfired?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.