Sunday, November 13, 2016

Gold Price Skyrockets 
In India After Currency Ban
TRY GETTING GOLD FOR U.S.$ 3000.00/ounce!
Jayant Bhandari explains the unintended consequences of India's financial repression .. India's government is conducting a war on cash - it banned the use of Rs 500 (~$7.50) and Rs 1,000 ($15) banknotes .."This pretty much made most currency-in-use illegal. Banks and ATMs are closed today .. Today, there is utter chaos in the market, with only the spontaneously erupted black market available to bypass the ban — most people simply don’t have anything else but the banned currency bills. Some are booking train tickets for future rides and are subsequently canceling them — they can use the banned currency to buy the tickets and can then get legal currency back after ticket-cancellation charges. This is costing people a lot of time, but it is the only way they can stay afloat and buy food. Others are taking different measures, equally desperate .. Huge chaos in the Indian economy should be expected to continue — as India’s government is simply incapable of bringing liquidity back any time soon. Businessmen will waste their time dealing with this nonsensical event, instead of investing and creating wealth. India simply continues to do more and more of what makes it an uneconomical and wasteful place to invest in."
LINK HERE to the article


Anonymous said...

Nuts ... which makes me think our TrueDo will no doubt be contemplating it. Back to trading in beaver skins. Indians would like that.

Eh india is no small economy. Nuts there might breed. It amounts to arbitrary confiscation of wealth by government.

Anonymous said...

India Delegitimizes Rupee, Lighting Fire Under Long-Term Gold Demand!

In its impatience, the Indian government will succeed in imploding the population’s faith in the Indian rupee. Historically, this type of capricious behavior is the very thing that causes people to lose faith in their government. A lot of Indians keep their savings in the form of gold, rather than in banks or even in cash, because they don’t have faith in the rupee. This demonitisation scheme has validated that lack of faith. Those who kept their money in the form of cash are now hurting. Those who kept it in the form of gold and silver coins are sitting pretty.

In a country that loves gold, in the first place, PM Modi has just lit a new fire under long term demand for the pretty yellow metal. Reports are that demand is now skyrocketing in the immediate aftermath. The sudden spurt will level off in time, but it is merely a beginning. In the long term, the Indian currency is now delegitimized. The general population of India has lost whatever little faith it ever had in the rupee. A higher percentage of people’s wealth will, henceforth, be stored in gold or silver than ever before. It will do no good for the Indian government to continue or increase the persecution of importers. The precious metals demand will be met by smuggling.

In the short run, sharp upturns in demand for gold will have little effect on world prices. That’s because politics, leveraged trading, and the desire of central banks to silence the “canary in the coal mine” are more important factors. These can overcome real demand for a long time. Increases in demand can be met for as long as foolish policy-makers in America are willing to piss away the nation’s gold reserves. They’ve done, I believe, for a very long time, in a foolish attempt to hold down prices. The US gold reserve, however, is not sufficient to hold down prices forever. That is especially true now, when the incoming President is almost certain to stop its continued utilization as soon as he takes office on January 20th.

That is, perhaps, why market manipulators are targeting stop loss orders, right now, and seeking to squeeze long gold buyers in a number of ways. They are simultaneously pushing up the US dollar’s exchange value in a flurry of fierce activity that is not supported by any change. Induction of market panic and a short squeeze in the dollar, simultaneous with a long squeeze in gold, however, will help them escape from positions that will soon become very unprofitable in both, before the change in administrations.