And now Gold Gate…
After 2G, CWG, CoalG, and the ChopperG, Sonia G’s UPA Government is readying itself for one more astronomical scandal. This time too, the scam revolves around a natural resource. After attaining scientific precision in the art of scamming through profitable experiences in the 2G fiasco which dealt with the illegitimate delivery of telecom spectrum; the commonwealth games debacle which related to the financial manipulation of humankind’s most natural resource: The Human Sporting Potential; Coalgate which resulted in virtually free distribution of Coal mining blocks in return for corporate kickbacks, the ChopperG involving the procurement of Augusta-Westland helicopters (Made in Italy Ma Sonia’s Country of origin), now the Sardar MMS lead (?) government is targeting Gold, the most precious natural resource. Before we silence the reader’s curiosity about the Gold Gate scam and expose the sinister designs of the United Pervasive Alliance (UPA) government, let us dwell into the reasons why Indians have an eternal attachment to gold acquisition?
There are 6 key factors which contribute to our immense lust for Gold.
- Gold is virtual currency and the most trusted medium of exchange in a world in which central banks are relentlessly depreciating the value of printed money, Gold continues to be a true value representative for financial and monitory exchange.
- Gold is a great proven hedge against inflation.
- Thanks to its multiple uses in jewelry making and creation of ornaments and works apart, gold also brings with it its very own satisfaction value.
- Gold also is a traditionally considered the best measure of storage value; check for instance the massive cache of Gold apparently stashed away in the temple vaults of Padmanabhaswamy temple. Vault A alone according to locals is estimated to hold about 10 lakh crores of Gold. This establishes beyond doubt the long term storage value proposition of the yellow metal.
- The modern financial system has made it possible for people to own gold without possessing it physically. The concept of paper Gold or acquiring gold in the electronic form i.e. by way of gold exchange traded funds, gold EDFs, has dramatically increased the access to Gold making this precious metal a favorite choice amongst the investor community.
- Gold is the only solid asset that is owned by the majority of Indians. This is the only source of financial security for over 650 million Indian women who constitute half of India’s 1.3 billion populations, one seventh of humanity.
After having sufficiently illustrated the tremendous value proposition of Gold, for savers and investors, let us now turn to the issue of policy-led corrupt practices of the UPA government.
For the past one year the Union Finance Minister, Mr. P. Chidambaram has been raging a high pitch battle against the average Indian gold buyers. This battle has assumed war-like proportions in recent times. First the FM urged Indians to resist the temptation of buying Gold and when this appeal met deaf ears, the FM decided to levy a 10% customs duty on gold imports in addition the Reserve Bank of India joined the anti-gold chorus with its set of measures which linked gold imports to Gold exports. The RBI dictated gold importers to link the quantity of Gold imports to export shipments in the ration 5:1. What this simply means is that for every 1 gram of gold exported, we in India will be permitted to import 5 grams of gold. Last year India exported 70 tonnes of gold and gold jewelry. If RBI’s Fatwa is followed in letter and spirit, we will be able to import only 350 tonnes of gold this year. Now arrives the scam bit.
Last year India consumed nearly 900 tonnes of gold. Virtually all of it was imported. The Chidambaram-Subbarao gang plans to cut down gold consumption by nearly 61%. A proposition which can at best be described as absurd, and at worst, absolutely extreme. These measures targeting gold imports have been apparently implemented with the view to control India’s growing current account deficit (CAD). However this is the optical cause. The actual and factual reason why imports of gold are being targeted is to create a vibrant market for contraband gold. Yes the Congress led UPA government has become a facilitator of gold smuggling. The size of this scam is difficult to quantify with precision on account of its mega-magnitude. Suppose the consumption of gold falls by 30% Indians this year will require 630 tonnes of gold. 350 tonnes will enter the country through legitimate imports. The balance 280 tonne will be supplied by the infamous community of illegal traders made popular by Bollywood and known to all of us as Smugglers. At approximately 30,000 rupees per gram, 1 tonne of gold is valued at rupees 300 crores. Assuming that only 200 tonnes are smuggled into India the value contraband gold works out to rupees 60,000 crores. If we assume that 500 tonnes of gold is smuggled, the scam size will expand to rupees 1, 50,000 crores. We are not privy to the amount of kickbacks, let us call it facilitation fees, which the Congress and UPA will be entitled to. However it will be safe to state that this fees figure will be sufficient to fund UPA’s 2014 LS poll expenditure.
The author is the Founder and
Chief Editorial Architect,