Indian Gold Import Ban: Fact or Fiction?

Prime Minister Narendra Modi’s move to ban 500 and 1,000 rupee notes caught the country by surprise, with many Indians now looking to liquidate their stockpiles of cash. Internet chatter is now a flurry, with some wondering whether the government’s next step will be to ban gold imports and prevent Indians from cashing in “black” money.

Frank Holmes, chief executive officer of U.S. Global Investors, thinks there may be something to the rumors. Holmes said that concerns over the potential gold import ban are prompting some Indian gold traders to place bulk, short-term orders of gold.

"The uncertainty in the Indian gold market, after the ban on high-denomination banknotes last week, is exacerbated by the threat of an import ban, and wild swings in the gold price are likely,” he said.

And while Arora thinks if the ban should occur, gold could fall $200 an ounce on a given day, Holmes forecasts that it would be more along the lines of a potential $100 decline and then the metal should reset itself.

Indian Gold Import Ban: Fact or Fiction?