Quote "India is looking to shoot the messenger. It wants to ban the sale of gold coins via the banking system. India's currency, the rupee, is falling fast against the US dollar and a range of other currencies. As a result, Indians buy gold to protect themselves against the falling rupee. This increases India's imports, which worsens its current account deficit and puts more pressure on the currency. So the Indian government, in their wisdom, look to remedy the situation by trying to discourage gold imports. Genius. India's problem is that it's no longer the 'hot' economy it was just a few years ago. The 'emerging markets' are now emerging slower than many had hoped. The two big ones, India and China, are not emerging much at all. The hot money that previously flowed into these economies is now lukewarm at best. So the Indian rupee is under pressure, and apparently it's gold's fault. The interesting thing about this is that India's private stash of gold is massive. According to the World Gold Council, its citizens hold around 18,000 tonnes of gold. At a US$1,600 gold price, that equates to around US$1 trillion dollars. That's not US$1 trillion of debt based money. It's unencumbered wealth. But because it sits outside the banking system and out of the reaches of the morons who run the country, the gold has no bearing on India's economy or currency. More http://www.dailyreckoning.com.au/why-india-is-buying-gold/2012/06/28/
