Guest Post: "Measuring Indian Precious Metal Imports", by Koos Jansen

Another great piece of work from Koos Jansen that you simply must be sure to read and consider.

Much has already been made of the insatiable physical gold demand coming out of India. The removal of some import-export restrictions has caused gold imports to surge even higher, making India the second-largest gold importer on the planet, behind China.

What's not discussed as frequently is India's demand for silver and this is where's Koos' new article is so important. In a world that is already seeming to exist solely upon flow of available silver, adding this extraordinary level of demand from India should only exacerbate what is already a tenuous situation.

The Silver Institute calculated total silver mine supply for 2013 to be approximately 819,000,000 troy ounces. This is about 25,500 metric tonnes. ( The Silver Institute also estimated the 2013 level of scrap silver to be 192,000,000 ounces. This is about 6,000 metric tonnes. ( According to the data listed in Koos' article, after importing a record 1,254 metric tonnes of silver in November alone, total Indian silver demand for 2014 is on pace to exceed 7,400 metric tonnes.

So, let's do some math. If we divide 31,500 by 7,400 we get 23.5%. Yes, you read that right. For the year 2014, the country of India alone will import nearly 1/4 of total global silver mine and scrap supply. All the while, spec algos continue to parade onto the short side of the paper silver game, pressing price lower and lower. Therefore, it's easy to conclude that something has to give in 2015.

Chew on that over the weekend,


India Silver Import 6789t YTD, by Koos Jansen

Gold and silver import into India in November was spectacular. According to the DGCIS provisional estimates India imported 148 tonnes of gold, year to date India has imported 745 tonnes, down 3 % y/y.

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In 2013 the import duty on gold was raised from 4 % to 10 % and the 80/20 rule was implemented – the latter required all importers to re-export 20 % of all gold imported. On November 28, 2014, the 80/20 rule was suspended, nevertheless India imported the largest amount of gold in November since May 2013.

Why was import elevated? First of all because demand was strong.

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Second, I think there has been little obstruction to import gold. Let me explain what I mean with obstruction; the premiums on gold in November averaged a little over 3 % (after subtracting the 10 % import duty). Strong official import and low premiums tell me there is very little gold smuggled into India. When premiums skyrocketed it meant that gold imports were obstructed by the 10 % import duty, the 80/20 rule and the confusion in paper work that initially was caused by the 80/20 rule; tightening supply and raising the premiums. This is confirmed by an inverse correlation between official imports and premiums (falling premiums coincide with rising official imports and vice versa). Now the premiums are low I think there is little obstructing for gold to be imported through the official channels. In November gold importers were still required to pay the 10 % import duty and re-export 20 % of their cargo, however, it seems these procedures were smoothened compared to previous months.


In November India imported 1,254 tonnes of silver – a record as far as my data goes back – year to date total import stands at 6,789 tonnes, up 28 % y/y. India is heading to import approximately 7,406 tonnes in total this year. What’s yearly global silver supply again?

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Silver premiums are relatively constant in India.

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Koos Jansen
E-mail Koos Jansen on: koos[dot]jansen[at]bullionstar[dot]com

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