India Rethinks Trillion Rupee Gold Coin, Enforces More Gold Controls.

Paper gold or gold ETFs may be seeing smash crashes and just as violent pops higher, but physical demand remains where it has been for years now. Soaring. The global central bank easing policies has forced the hand of the average investor and they are looking for anything that represents a physical store of value.


 
India’s issue is that the demand caused their April trade deficit to soar and May isn’t looking any better. Citizens that own gold are also taking out loans using it as collateral and banks are all too willing to hand over paper money when to collateral is in such high demand.

An idea that has been floated is the trillion rupee coin. Not unlike the idiotic idea that some in the US had for the treasury to mint a trillion dollar platinum coin to bypass the debt ceiling. This rumor was quickly shot down and the Indian central bank says their is a firm 50 gram limit on all gold coins minted.

New rules have been put in place barring any loans made against ETF gold holdings. This should give credence to the theory that the ETFs are worth less than the paper they are made out of. No one knows where the gold is physically at, how many loans have been made against that holding or how many times it has been rehypothecated.

The government has even come out and urged its citizenry to restrain its passion for gold. And in a move that will only bolster said passion, the finance minister came out with a warning saying that gold imports may be curbed in the near term. Yeah, that will show those gold bugs. Limit the amount of gold and surely demand will go down. Oh wait.

So with government threatens to limit availability of gold, the lines at jewelers and gold sellers will just get that much longer. A great parallel to this would be the ammunition shortage in the US. If people get the sense the government is going to ban something, they want it all the more.

Source : tradethenewsroom.com