We have long assumed the physical market would be the undoing of the gold cartel’s effort to cap gold. Evidence is mounting that this dynamic is starting to unfold on many different fronts. SD reader Anders has reported that Bangkok gold dealers are totally out of bullion products other than a minor amount of jewelery.
This week the highly reputable Business Standard of India reported there are “acute” shortages of gold in Southern India:
Major jewelery manufacturing centers in south India are facing acute shortage of gold ahead of the wedding season despite the industry’s claim to have seen a record import of the yellow metal last financial year.
Centers like Coimbatore in Tamil Nadu and Thrissur and Kochi in Kerala are facing huge shortage of gold. These centers constitute around 15-20 per cent of India’s overall annual demand of the yellow metal. “Nominating agencies that are responsible for supplying gold to jewellers have failed to meet up the industry’s requirement in the south Indian states with supply becoming a major constraint in these smaller regions,” said Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC), on the sidelines of a seminar here today.
The Indian government has made an effort to steer public interest away from gold and into financial services products, from equities, gold ETFs and simple bank savings accounts. They’ve levied import taxes in hopes of improving India’s trade balance. But these efforts are only having limited success. The Business Times story indicates that some gold jewelry manufactures have fared better than others obtaining gold for production, and that Southern Indian producers are not positioned as well as the overall supply has diminished. But it’s clear there’s more going on here than just a supply chain problem created by government meddling and less efficient management decisions by Southern Indian gold jewelry producers! The shortage is real and Indian gold demand is on the rebound after having cooled off a bit in 2012.
This is all happening at the same time there’s growing speculation that the cartel is attempting to cover their short positions.
Got gold and silver? By the time 2013 comes to a close, prices should be MUCH higher.