With the recent withdrawal of India’s 2 largest denomination bank notes (the 500 and the 1000 rupee notes) and the increase in taxation on imported gold, the overall demand for the precious metal has dropped in India. The surprising move by the government to ban the 2 bank notes (known as the “black money” ban) was aimed at eliminating corruption and tax evasion. Many people have been affected by this event and among them are traders who rely on a cash business daily.
Despite the drop in demand for gold in India, gold prices haven’t been affected as it relies more on international affairs such as the uncertainty for financial markets due to a Trump-presidency. However, one thing that has been affected due to the subsided demand for Indian gold is the demand for silver. The overall result is silver is up as Indian silver imports grow to almost 8,000 tons, 14% up on the previous 2014 record, in 2016. One thing to keep an eye on is an increase in demand for Indian gold as traders, and the economy as a whole rebound from the commotion of the “black money” ban.