Who is the Biggest Importer of Gold globally?
China on imports alone but India is by far the world’s largest importer and consumer of gold. According to GJEPC Chairman Colin Shah, “About 1,067 tonnes of gold import in 2021 can be attributed to the abnormal pandemic situation a year prior when imports had nosedived to 430.11 tonnes“
The main destination of Gold exports from India are United Arab Emirates, Turkey, Switzerland, Qatar, and Hong Kong, notice all are mainly Jewellery centers?
Given how much Gold goes into India officially (and unofficially via the Hawala system) you would think that the LBMA would make more of an effort to approve Indian Refineries for LBMA Good Delivery Status but no, there is only one Indian Good Delivery Refinery and it’s partly owned by the Indian Government under their private entity MMTC and the other part by the LBMA darling jewel in the crown Swiss Refinery PAMP and are known as MMTC-PAMP.
Interestingly there are 12 Good Delivery Refineries in China, I’ll leave this one for another blog post.
Due to Gold not being able to be officially exported as Gold Bullion from India many times gold premiums trade at a discount to spot gold on a per ounce basis in India and stock piles of gold are held creating liquidity issues in country. During Covid this was particularly bad for many Indian Gold refineries and a number shut down completely.
The issue that everyone knows is that gold goes into India (officially) but only comes out in jewellery form as Gold Bars are not allowed to be exported (officially). Out of the total import of gold in India, 25 to 30% is now gold dore import by only few of the 41 licensed gold refineries and all of it goes to bulk bullion traders.
Let’s say a certain jewellery company makes Gold Medallions and then ships them to Fujairah where they are then sent via a certain security company to a certain LBMA gold refinery in Switzerland and smelted into 9999 Gold!
That method seems to be ok with the LBMA and the people at SwissAid despite being a very grey area indeed. I guess that is one way to get your gold out of the country and into the LBMA system!
Whilst at a Gold conference in India the then Bombay Bullion Association (who later changed the name due to some strange things going on allegedly) were on stage talking openly about Hawala, a certain bullion bank known for manipulation of the gold market leaned over and ask me what that was about, this is what I explained to them later that day: What is Hawala https://www.investopedia.com/terms/h/hawala.asp
Gold Imports/Export regulations and taxes change so often its hard to keep up, so do seek professional advice when looking at India as a potential opportunity for your gold business.
Before we get into the Indian Gold Refinery List lets take a look at the Indian Gold Sector which has years of legacy