What’s behind India’s gold slump?

Despite a seasonal boost, gold imports are on track to drop to their lowest in five years, driven by high prices, an excise tax and a ban on high-value banknotes. One-third of India’s gold is bought with “black money”

Indian gold imports (tonnes)

0 20 40 60 80 93.3 100 111 120 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Jan: $34,183/kg – imports plunge as price rises

Feb: Government imposes 1% excise duty, on top of 10% import duty on gold

Jul 6: $43,882/kg – price of gold peaks following shock vote in Britain to leave EU

Aug-Nov: Buying rises during festival season which concludes with Diwali – Festival of Lights

Nov 8: Prime Minister Narendra Modi bans 500 and 1,000 rupee notes

18.0 22.0

2011 gold imports: Demand for dollars to buy gold weakens rupee by 16%

967 tonnes 514 tonnes

20,000 tonnes India’s estimated privately held gold stock. At current price of $37,471/kg this stockpile is worth $749.42 billion 78% of India’s household savings are held in gold

2016 gold imports (Jan-Nov): Set to be down more than 40% over past five years

Sources: World Gold Council, Indian Finance Ministry
Picture: Associated Press