Demand Explodes, Part 3: Indian War Elephants are Unleashed!

Silver isn’t just a bargain in relation to gold’s value, it’s now a bargain related to gold’s tax in India!
Thanks in large part to India raising taxes on gold, in 2013, Indian silver demand hit a monstrous 6,125 tonnes!
That’s just under 200 million ounces of silver!  That means that Indians sucked in nearly 1 in every 4 ounces that our planet produced!
Whoops!  If there was ever a textbook case for “unintended consequences” and “blowback” by government action, this is it!

Submitted by The Wealth Watchman

A Quick Update On the Watchman’s Own Attack

On Friday, as the cartel took paper silver downward again, as I expected, I finally deployed the cash I’d been saving for months.

Spot was $16.80ish when I “pulled the trigger”/”thrust my trusty spear” into the side of the beast. Even with shipping, wiring costs, and premiums, I acquired one of these beautiful darlins’ from SDBullion for $18 per oz.  Can it get cheaper?  You betcha!  Does the Watchman care?  No’tcha!

silver100oz-jm-4

Understand though, this particular time, I wasn’t buying for myself.  I bought this for my church, and will deliver it to them, as the Watchman is deeply religious, but know this: even if you’re not religious, think very hard here and ask yourself the question:

Is there someone in my life who I care deeply about, who will also need this protection, but either won’t or can’t prepare themselves for what’s coming in the same way that I am?

I’m confident that if you think carefully enough, you’d find a number of families, individuals, or organizations who could certainly use a precious, “rainy day” umbrella.  Couldn’t you?

Where would mankind be without the kindness of charity, without the love of people selflessly taking strong actions to ensure the safety of others?

Who are those people in your life?

I certainly can’t tell you, because it’s different for everyone, isn’t it?

Just think for yourself by asking who means the most to you, and help them in whatever way that you can.  It’s not my job to tell you who they are, nor to give you “investment advice”.

What I’m doing is reassuring you, that when you hear me talk in my HQ of the strategies, and battle plans, that I’ve decided are good ideas, I’m not simply talking to the ether: I’m doing those same things myself.

Golden Elephant

“The Festival of Lights”

I would be remiss in this precious metal demand series, if I didn’t bring up an ancient cultural phenomenon that occurs in India every year. The phenomenon is a giant festival of lights, of fireworks, and of marriage.

Though Diwali is known as the “Festival of Lights”, in truth, it really is a festival of triumphal hope: of good over evil, of hope over despair, and of light over darkness.  Although each year, for roughly a week’s time, nearly a dozen nations celebrate this holiday, certainly India is the chiefest country who is most associated with Diwali.

During this anticipated event in the lives of hundreds of millions, people in the Hindu community clean their homes, and decorate them by placing lights upon their housetops, around their businesses, in their windows, and within temples.  The dazzling display of lights becomes something truly gorgeous.  They shine so much light, that it’s hard to wrap one’s head around.  So, I’ll simply let this space photo of India during Diwali, give us all a clearer picture of just what it looks like:

India Diwali night

Magnificent!

That is a truly awe-inspiring sight, is it not?

The “Big Deal”

“Great, Watchman, so Indians likes lights, big deal!  Why are we even talking about this?”

So, ya wanna know why, huh? Diiiiiiid I mention that one of the chief things which participants in this festival do is exchange gifts during the wedding season?

“Uh, no, and again: why should we care?”

Diiiiiiiid I also mention that one of the key gifts given during the wedding/Diwali season, is gold?

“Ok, great, so they buy gold?  Why aren’t you getting back to serious precious metals demand issues?  Who cares if these people get a few 12k and 14k trinkets for each other?”

Ok, first of all, champ, they have a word for 12k and 14k jewelry:  junk.

Here’s the thing: Indians love gold, because to them it symbolizes not merely wealth or prosperity, but purity, both of mind and body.  What sense does it make to buy something extremely impure to represent extreme purity?  

So keep in mind, that while we’re talking about their gold purchases, we’re talking about extraordinarily pure gold.  18k gold is on the lower end of the scale that they’d consider buying.  Much of it is 22k, and even 24k is used on some occasions.

It’s not just the purity of India’s gold that’s impressive, either.  It’s the particular quantities of gold which Indian families buy that makes it such a huge deal.

How much gold are we talking, here?

Let’s just say that Huey, Dewey, and Louie’s favorite uncle would have a fantastic time practicing his butterfly stroke in a pile of the the yellow loot that Indians acquired each year at Diwali.

Scrooge-McDuck

These people go monstrously, insanely nuts about their gold!

In point of fact, so much gold is removed from world supply each year by the peoples of India, that for generations, they’ve been the world’s most dominant buyer of it.  It was only recently that India was overtaken by China as the world’s #1 gold buyer (which we’ve already taken a judicious look at), but despite that fact, gold continues to be one of the most crucial, hot-ticket items one could possibly find in that country.

“If There’s No Gold, There’s No Wedding”

It’s not enough though, to know that Indians buy gold.  You must understand why they do it.  It’s not simply an act of “anti-fiat” activism as it is in many of our cases, although any acquisition of precious metals is activism in our world, whether one realizes it or not.  As I’ve touched upon with SGT, in our recent interview, gold and India are forever joined at the hip. It is an alliance that has withstood the winds of time, and the arrows of central bankers.

In Indian culture, it’s the job of the bride’s family to provide the gold that a daughter is to wear and keep throughout the marriage.  Although the ancient Indian “brideprice” system was officially banned in 1961, the dowry culture is unofficially still very much the reality on the ground.  In fact,the bride’s family is still expected to provide the daughter with an adequate dowry of gold to ensure her husband’s family’s security and survival.

Gold is seen as much of a statement of security, as it is a statement of social status.  It gives respect and admiration not just to the bride, or even to the bridegroom, but also to both their families.

For a fantastic look at the real heartbeat of India, regarding its cultural views on gold and marriage, you simply must watch this video, if you haven’t done so.  I’d normally embed it, but CBS, has restricted embedding in their vids(count on the mainstream media to be such dinos, as to cut off their own legs with goofy things like that).  Nevertheless, it is an excellent piece which explains where Indians are coming from.

Unlike here in the States, India prizes the organic communities of family and their kindred peoples, above that of the individual.  You must understand, the Indian weddings are much less about the uniting of bride and groom, and more about the uniting of 2 distinct families.  Very different, indeed.  They view it as such a big deal, in fact, that these wedding celebrations can go on for days(and in some extreme cases, weeks).  

Just imagine the financial costs that must be saved up for, in order to prepare for these weddings: they don’t just save for the exquisite gold jewelry for security and social status, they also have to save enough to pay for a wedding and reception for hundreds or even thousands of guests……for days!

 

Sheesh, and you thought Steve Martin had it rough!

Father of the Bride

Indian gold jewelry is among the finest in the world.  It is truly an artform.

It is highly-coveted, skillfully-made, quality craftsmanship.

Just feast your eyes on beautiful pieces, like this:

Indian wedding jewelry

Or this:

indian-bridal-jewellery-latest-new-year

Or one of these!

Indian gold bride

Now…..take a good look at that jewelry…then multiply it times 10 million! and you’ll begin to understand just how much gold we’re talking about here! 

Yes, not every family can afford the lavish gold items you see above, not by a longshot, many are far more modest, but when you live in a country with 1.2 billion people, then over 10 million of these weddings each year is going to put an extraordinary dent in global gold supply.

In fact, some have put the average amount of gold bought for each wedding at roughly just one ounce, but again, multiplied by 10 million, it comes in at a staggering 300 to 400 tonnes of gold demand, just for weddings!

Now, the pesky gold import tax recently applied by Indian authorities, has certainly slowed demand somewhat, but only officially.  In fact, when I first heard of this ludicrous tax, I remember thinking aloud:

“Great job, geniuses! You just took a sledge hammer to the face of your jewelry industry, in an act which will simply drive your gold demand deep underground.”

That is exactly what has happened, too. As recently it wasreported that at least 50 tonnes of gold jewelry has just been smuggled into India in just 10 days’ time, in order to satisfy Diwali demand. That is over 1.6 million ounces, which will make its way into the hands of the people, without giving their bureaucrats even one dime!

Gotta admire their spirit!  Politicians and bankers can try as they might, but they will never, ever diminish the heroic Indian desire to buy this precious treasure.

Indian Silver Demand off the Charts

Oh!  And speaking of that pesky precious metals import tax, it has also had a rather peculiar effect on the Watchman’s favorite metal: silver!

One thing the politicians probably didn’t anticipate, was that the gold tax(which has been pegged at around 10%), has only served to give a nitrous-engine boost to Indian silver demand! 

Both metals have roughly the same tax premium applied to them, that’s true, but what’s a bigger hit to your wallet: a 10% hike on a $1,200 item, or a 10% hike on a $20 item?

Yes, and that’s just what Indians have concluded too!  Silver isn’t just a bargain in relation to gold’s value, it’s now a bargain related to gold’s tax!  The Watchman would like to thank every clueless, New Delhi dimwit who voted for this outrageous shakedown!

Why?  Because thanks in large part to that shakedown, last year, Indian silver demand hit a monstrous 6,125 tonnes!  That’s just under 200 million ounces of silver!  That means that Indians sucked in nearly 1 in every 4 ounces that our planet produced!

Whoopsie!  If there was ever a textbook case for “unintended consequences” and “blowback” by government action, this is it!

India’s thirst for silver didn’t stop in 2013 though, as thus far, through the month of June, Indian silver demand has reached over 2,888 tonnes, on pace to hit 5,776 tonnes by December’s end.

However, those demand figures were 3 months ago, weren’t they?

How much silver do you think India is likely to buy now that it’s a full 25% cheaper!  

Shield brothers, this ought to be goooood!  You see why I rejoice at these price take-downs!?  What folly, what silliness!  Don’t sweat this one, just grab a bag of popcorn and watch with glee as the bullion banks fire on their own men!

SD Bullion

Conclusion

Two years ago, it was reported that Indian households personally held an estimated 20,000 tonnes of gold.  That was before another 2,000 tonnes had made their way there in the past 2 years, by the way.

This means that the Indian people own nearly as much gold (in fact), as all the world’s central banks own (in fiction)!

Central bankers have leased the majority of their gold, to contain its price rise.  Indians don’t care however, they just shrug, and buy more, especially if the price is beaten down.

This 22,000 tonne gold horde means that in a world where gold and silver were re-monetized by the actions of mankind (not by goofy bankers), India would be the wealthiest nation on the planet!

This reason alone explains why India would seek to stake their future on the BRICS alliance: the Anglo-American system, keeps them poor, when they’re truly, vastly, enormously wealthy!

Why should India go on choosing to be one of the poorer nations (because it is a choice), when they’re, in reality, the richest?

The central and bullion banks, are holding thousands of financial bazookas, it’s true.  Comically though, they’ve decided in their latest price-rigging campaigns, to aim those big guns squarely at their own mirrored reflections!

Didn’t their mamas ever tell them that it was bad “juju” to break a mirror?

Don’t waste your precious, mental energies giving these price attacks even one iota of thought. Just do what 2.5 billion people in India and China are doing, and join in the attack to wreck these money masters!

We can’t let Asia have all the fun, can we?

-Wealth Watchman