In August alone India bought 6 months worth of ETF sold gold
Whatever developed market gold investors are disposing of, India is more than happy to take judging by the sub-continent's latest customs data.
Gold bullion imports more than doubled to $4.95 billion or 140 tonnes in August compared to 89 tonnes in July. The August tally is up from just over $2 billion (50 tonnes) in the same month last year.
Ole Hansen, head of commodity strategy at Danish Bank points out that India's imports for the month is roughly the equivalent of the last 6 months' net redemptions of physically-backed gold exchange traded funds.
Domestic demand usually picks up in the run-up to festival and wedding season in the country, but the 140% surge is creating fresh headaches for the country's finance ministry.
The strong gold purchases – India's biggest import item after crude oil – pushed the August trade deficit to $12.5 billion according to the Economic Times.
Import tax of 10% and various other duties and regulations instituted over the last couple of years have not dampened demand for gold inside the country – mainly for the jewellery industry – which is the world's number one importer ahead of China.
In an attempt to put the estimated 20,000 tonnes of gold households and Hindu temples are hoarding to more productive use and alleviate pressure on its current account, the Indian cabinet last week approved two new gold monetization schemes.
Image by Edson Walker