A K Agnihotri: ALL THAT GLITTERS IS GOLD (part v)

Modern restrictions on gold exports to India

Between WWI end and the start of the WWII, it was clear that India would not stay a colony for long. Indian independence would happen sooner than later. Between 1920-40, in a series of measures, policy decisions were taken, which made Indian interests subsidiary and inferior to Western interests. Central Bankers from the USA, Britain, France and Germany had many meetings to “coordinate monetary policy.” The agenda – gold flow management between themselves and an obvious understanding - don’t let Indians get the gold. ). They agreed that Indian demand for gold had a “…deflationary effect on global liquidity,” therefore Indian demand for gold had to be regulated.”

            India was paid with inflated and abundant silver stock, instead of gold. This silver was the same silver released by the Pittman Act – a “buffer to protect Western gold reserves against the Indian drain …” Of course, later the British Raj decided to settle Indian debts with promissory notes – and not even silver. It was this Indian ‘sacrifice’ which enabled the recovery of the West.

            From 1939, (the start of WWII), gold imports into India, the world’s largest market and also the largest private reserve  of gold, were controlled or banned. Not only the largest, but     Indian reserves of gold, are also the only significant reserve in the world without a history of war, genocide, slavery or loot, (unlike US, UK, Canada, Australia) or due to nature’s bounty (unlike South Africa, China, Peru, Ghana, etc.).

The first effect of restrictions on gold imports in India was on prices. Indian gold prices, on an average, were 30%-40% higher than international prices. The other thing that happened was that gold imports went underground. Gold imports (illegal), called smuggling, spawned the biggest criminals that India has seen.

 The common threads in this were, of course, America, drugs, underworld, war, corruption, warlords – but what made all this possible was Indian appetite for gold.

The common threads in this were, of course, America, drugs, underworld, war, corruption, warlords – but what made all this possible was Indian appetite for gold.

            All this was made possible by the Indian hawala system of money exchange. Hawala made money transfers safe, instantaneous, at a low-cost. Traditional Indian ships from a thousand ports in Goa, Maharashtra and Gujarat sailed with this contraband and brought back gold.

            The countries comprising these Golden Triangle /Crescent are India’s neighbours. The Indian underworld transported drugs through India. These drug shipments originated, were acquired, grown and traded from the Golden Crescent and the Golden Triangle.

            The US eliminated gold ownership restrictions in 1975. India followed. In 1992, India started its first hesitant steps towards legalizing gold imports. By 1995, these import control laws had been diluted to near non-existence. With the dilution of restrictions on gold imports came the abatement in the biggest crime wave in modern history.

            India. And an end to the greatest crime wave in the modern history.

Metallic gold is used by the alchemists to prepare a liquid that they affirm will restore youth when drunk." -Agricola, De natura fossillium, 1546.

            In what ways is gold consumed? About 75% of the gold produced in the world's mines goes to jewellery production. This is one meaning of the term "consumption".  More surprising are the many ways in which gold actually finds its way into the human body.

            Gold crowns are still the best. Although rapidly being replaced with less-expensive alternatives, dental amalgams containing high percentages of gold are still desirable as crowns. Gold is a soft metal, and its use in a crown lessens the stress put on the opposing tooth in the act of chewing. Modern porcelain crowns are much more brittle than gold, and are not likely to last the decades that gold crowns can.

            Gold also has medical uses. An isotope of gold, 198-Au, which has a half-life of 2.7 days, is used in treating some cancers and other diseases, and also as a tracer within the human body. A compound containing gold known as disodium aurothiomalate, is used in an injection as a treatment for arthritis. Auranofin, a complex organic molecule, is used in the treatment of some cases of rheumatoid arthritis.

            Serve gold at your next party. Gold in the form of extremely fine leaf (a few atoms in thickness) has been added to certain liqueurs from Eastern Europe, such as Goldwasser. This gives the liquid a sparkle in the glass, as the fine bits of gold catch the light as they float suspended. Pure gold leaf has a long tradition in cuisine both in Europe and the Far East. Exotic dishes are given the ultimate exotic presentation, wrapped in 99.9% pure gold leaf so unbelievably thin, that the gold itself is edible.

            Although consumption of gold is essentially harmless in small amounts, there is a gold toxicity that is known from its use in treating arthritis. Skin rash is the most common result of excessive consumption of gold for medicinal purposes. Gastrointestinal distress can from time to time result from excessive ingestion of gold compounds.

            A commonly used antidote is Dimercaprol,

HSCH2CHSHCH2OH, also called BAL (British Anti-Lewisite). BAL forms a stable complex with gold, rendering it physiologically ineffective and easy to eliminate from the body. Certain people develop a mild rash from wearing gold jewellery, although this phenomenon is not entirely understood today. This dermatitis may be caused by residual radioactivity in the minor alloys in the jewellery.

            Gold can be harmful in other ways. Of course, the most harmful aspects of gold to humans have nothing to do with actual gold consumption. More dangerous is that wide range of disorders, known collectively as "gold fever" (see Bogart, Humphrey, "The Treasure of the Sierra Madre.").

            1)         Jewellery fabrication

            2)         Industrial applications

            3)         Governments and central banks

            4)         Private investors

            1) Jewellery fabrication: The largest source of demand is the jewellery industry. In recent years, demand from the jewellery industry alone has exceeded Western mine production. This shortfall has been bridged by supplies from reclaimed jewellery and other industrial scrap, as well as the release of official sector reserves. Gold's workability, unique beauty, and universal appeal make this rare precious metal the favourite of jewellers all over the world.

            2) Industrial applications: Besides jewellery, gold has many applications in a variety of industries including aerospace, medicine, electronics and dentistry. The electronics industry needs gold for the manufacture of computers, telephones, televisions, and other equipment. Gold's unique properties provide superior electrical conducting qualities and corrosion resistance, which are required in the manufacture of sophisticated electronic circuitry. In dentistry, gold alloys are popular because they are highly resistant to corrosion and tarnish. For this reason gold alloys are used for crowns, bridges, gold inlays, and partial dentures.

            3) Governments and Central banks: The third source of gold demand is governments and central banks that buy gold to increase their official reserves.

            4) Private investors: Finally, there are private investors. Depending upon market circumstances, the investment component of demand can vary substantially from year to year.

            Acknowledgements—The article has been sourced from many publications and graphs are from gold tracking sites.