Indian Imports & Temple Gold
- We believe the government will adjust policies if they see those adversely affecting votes. This translates into a lowering of the import duty and current requirement to export 20% if imports of gold ahead of the elections.
- India's CAD has already created a Rupee/debt to reserves crisis which is expected to worsen. Expect an international credit crisis to appear in time. The crisis has been slowed through the temporary use of swaps and gold import restrictions. There is no visible sign of effective action to halt the underlying crisis.
- With 25,000 tonnes of gold, India only needs to use a small portion of this to give it time to try to resolve the crisis fundamentally. We cannot see how they will resolve India's economic/monetary crisis, but at least gold will give them time to try.