Is India About to Flood the Gold Market With 200 Tons of Leased Gold?

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India is now considering leasing out the 200 tonnes of gold it bought from the International Monetary Fund in 2009.

For India, this may be the nuclear option: its central bank, starved for dollars, is considering every initiative to procure short-term dollar liquidity to fund massive USD-denominated investor withdrawals out of the country, which as hammering the Indian Rupee, and which if unmet, threatens the entire financial system in the country.

Indeed, as the HBL reports that the gold will be leased in the international market for dollars so as to shore up the sagging rupee, which plunged below Rs 64 against the US dollar in Tuesday's trade. A final decision may be taken next month, Finance Ministry sources said.

The move can fetch around $23 billion, David Gornall, Chairman of the London Bullion Market Association, has estimated.

This marks a tidy increase in the Reserve Bank of India's investment. In November 2009, the RBI purchased 200 tonnes of gold from the IMF, under the Fund's limited gold sales programme, for $6.7 billion, cash.
$23 billion for a $6.7 billion investment: not a bad return. And why not do it: after all it's not like India actually has possession of the gold, which most likely is located somewhere deep beneath the New York Fed. Ot is that the JPMorgan office at 1 CMP?

According to RBI sources, this gold was never brought into the country. It was just a book transfer.

Speaking at the India International Gold Convention in Jaipur last week, Gornall had said the RBI can organise a gold-dollar swap without divesting its holding or incurring any further interest charges.

"By swapping gold for a payable currency, you can benefit by having access to dollars for a period of your choice, while remaining a long-term holder of the gold, as the swap is a transfer of asset for a limited period. You will have bullion bank counter-party risk but this is successfully managed at the RBI, which has the strictest lending criteria of any central bank in the world," Gornall had argued.
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ZH
 
That's classic! They're announcing that they're thinking about the possibility of leasing something that they do not have, have never seen and stand no chance of ever taking possession of!

Talk about manipulation of perspectives.

I hope they do it. It would be interesting to see people buy the leased, rehypothecated gold that doesn't exist and then stand for delivery. :lol:

If India wanted to improve their balance sheet, all they would have to do is take delivery of the physical gold themselves and the US Dollar would probably collapse overnight.
 
Doesn't sound like leasing

Sounds like borrowing 20 billion US dollars with gold as collateral

The dollars would have to be paid back at the end of the swap contract
 
So the entity that leases the gold will do what with is? Try to push the lease off to another sucker in the hopes that that other party pays more for the lease than they did? I'm not sure I get it. Isn't that the embodiment of an overt pyramid scheme?



.
 
Nope mmissinglink, that's the way how business is done in 21. century.^^

Imagine I would be son of wealthy tycoon. I would go to some media and say I will sell several kilos of gold, because it stinks. Next day all newspapers would be talking about it.:)
 
This did give me a laugh, it really does sound like they have just about run out of idea's.

Also those stories about mining asteroids any time soon crack me up.
 
I've read there is plenty of interesting things in the sea.:)

Maybe someday golden asteroid will fall on my car, I will call Superman to lift it and then will always wipe my nose with 500 bills which are getting rarer and rare to see...^^
 
If 200 tons of Au become available - any way it does - China will suck it up quicker than a sick hungry seagull on a chip.

Gold is going one direction only ----- East.


Who is going to be looking better in a couple of years? China with containers of physical gold or India with warehouses of Rupees?

If in doubt - reference any history book.

Here is the quizz

Throughout history, he who wins has the most '????' ?


Fill in the missing word.

Gazza
 
gazzahere said:
If 200 tons of Au become available - any way it does - China will suck it up quicker than a sick hungry seagull on a chip.

Gold is going one direction only ----- East.


Who is going to be looking better in a couple of years? China with containers of physical gold or India with warehouses of Rupees?

If in doubt - reference any history book.

Here is the quizz

Throughout history, he who wins has the most '????' ?

Fill in the missing word.

Gazza
Click to expand...



Ambition.
 
One of the most influential man who ever lived on this (misery) planet said:

"It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle."

That was more than 2500 years ago.

Many things which we are (re)learning again was once already said/written. Hence, you can't be prepared for future if you don't know the past. But if you "swim" in the past for too long you can became it's captive.

So as Nietzsche said: And when you gaze long into an abyss the abyss also gazes into you.

^^
 
f India wanted to improve their balance sheet, all they would have to do is take delivery of the physical gold themselves and the US Dollar would probably collapse overnight.
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Wouldn't India have to wait 7 years to get 'their' delivered gold - like Germany was told? ;)
 
Classic how scammer Tyler Durden uses his negative GOFO rates - huge physical gold shortage - scam http://forums.silverstackers.com/topic-42281-a-historic-inversion-gold-gofo-rates-turn-negative.html as a source. The LIBOR reference sits close to zero which is the reason that the normal GOFO fluctuations around it reach the mathematical negative terrain.
If you sit on the lowest step of a ladder, then you may hit the ground when you scratch your !ss. Nothing to do with gold shortages haha.
The lack of criticism on Tyler Durden, the easy willingness to just accept anything he claims, is worrysome.
 
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