India Just Warned Citizens to STOP Buying Gold: This Is Why

Añadido: 2026-05-13

[00:00:06]Good morning. It's Jeffrey Christian of CPM Group. It's about 10:58 in the morning here in New York on Tuesday the 12th of May. I'm a little bit tight for time, so I'm going to speak fast and try to go quickly. There are a couple big topics to talk about. In uh India, there um are calls by the government uh to restrict gold imports and to try to discourage people buying gold in order to preserve foreign exchange. Uh the foreign exchange reserve situation within India has grown very severe. uh as fallout uh from the Iran war uh oil and gas prices are sharply higher, oil and gas import costs are sharply higher that's draining the foreign exchange and economic activity is suffering because of the war interrupting a lot of international activity within India. Uh so the Indian economy is suffering right now and uh the prime minister Modi at the weekend suggested that people stop buying gold in order to uh remove some of the pressure on uh the Indian and foreign exchange reserve position and trade balance. I'll show you some uh data in a second as to the uh further details on the Indian gold situation. Also, we had USCPI data come out this morning and it's sharply higher reflecting again uh some of the fallout from the Iranian uh US and Israeli attack on Iran. Um so, we'll go through that stuff, but first let's talk about the markets. Gold prices right now were about $4,683.

[00:02:02]They got as high as 4745 uh today. Our expectation had been that they would get up to as high as 4,850 over the next uh several days and we still expect that. In fact, we've increased uh our expectations a little bit on the upside. We continue to see gold demand relatively strange. It's it it's mixed in um the United States and Canada and Europe kind of a there's still some buying going on. There seems to be a little bit of a rejuvenation of non-traditional gold investor demand interest in gold uh partly due to concerns about the economic and political environment both within the United States and on a global basis. In India, you have seen investors not selling gold. um but rather holding on to it um in expectation of higher prices. And in China, you've seen investors buying gold and and jewelry demand and and electronics demand, fabrication demand for gold falling. So those are the three perhaps the three big markets that you see there. Our expectation is that the prices may trade sideways in a volatile fashion. Maybe a low of 4,000 or even 3,800 over the next three or four months. Uh and a high around 5,200 over the next three months.

[00:03:33]Silver prices have done more remarkably.

[00:03:36]If you look at our short ultrash short-term projections and expect price expectations, gold, platinum and platium have not reached the upper and they have risen but they haven't reached the upper level that we set for last week and this week uh as potential highs. Silver actually broke above the uh ceiling that we had expected. Um, it got up to about 88 this morning. It's trading around $8528 right now. And like gold, we see a mixed investor package. There are some investors taking advantage of the high prices and selling. We're seeing other investors rejuvenating their interest in in silver. Uh, and we're seeing a lot of investors who expect higher silver prices. Uh so it's continuing to move sideways with an upward side. It's gotten up to the upper end of the band.

[00:04:37]Uh we would not be surprised to see the price at $90 or even perhaps a little over $90 in the near term. Uh but then we would expect it to back off some. And it was higher yesterday than it is today.

[00:04:53]Platinum prices are around $2,117.

[00:04:57]Again, that's a little bit lower than we thought might be the threshold. Uh, but we have seen the price rise over the last week and a half, and we expect the prices continue to show upward pressure.

[00:05:09]Next week is platinum week in London, and there will be a lot of bullish reports coming out by marketing groups saying, hey, there's this massive deficit, which doesn't actually exist, but they will try to tout platinum and convince investors that they should continue to buy. That's how the rally started last year in late May, early June and and there's look platinum marketing groups are looking for a repeat this year in a vacuum of accurate information. They think they can say anything and investors will believe it and they do.

[00:05:48]Palladium is in a similar situation. The price is around $1,491 uh right now. It got as high as $1,540 earlier today. Again, our expectation is that the prices will move higher over the next uh year. Uh but that we could see the price move sideways for the next three months.

[00:06:14]I want to talk about India and hopefully my chart will show me this. As I said, the prime minister asked at the weekend that Indians stop buying gold jewelry for a year in order to reduce demand. Now, most of the gold that is used in India and bought in India comes from domestic sources.

[00:06:36]There's an enormous amount of gold held in India. In 2013, we did a a a a deep scrub of our data and we estimated that 521 million ounces of gold was held in India in bullion form, in jewelry, in decorative objects, statues and figurines and things like that. Quasi investment holdings, 521 million ounces.

[00:07:05]India in the 1960s when Anglo-Americans started doing fundamental research on supply demand and inventories of gold they estimated that India Indian consumers and individuals owned more gold than any other uh country and that's been true ever since that time uh I think it was probably around a 100 million ounces that they estimated in the 1960s by 2013 it was about 500 120 million ounces. Our estimates are that since 2013, perhaps as much as another 155 million ounces have been held added to Indian above ground inventories.

[00:07:49]That's an enormous amount of gold held by Indians. It's probably larger than in any other country. This includes again bullion, boan coins, medallions, but it also includes gold held in jewelry and decorative objects as quasi investment or as investment uh factors. And that is a big part of the Indian monetary system, currency system. You see people holding gold and silver as savings and selling it when they need money and buying it back when they have excess rupes.

[00:08:24]Most of the gold probably is owned by Indians, but there's a sizable amount of gold that's held by companies that are majority owned uh in majority Indianowned but with substantial non-resident ownership. There are people uh in many parts of the world who would like to own gold in India. Uh foreign non-resident owners uh ship is not allowed.

[00:08:51]uh but you can get around that by investing in a c Indian c Indian majorityowned Indian company that invests in gold. So that's there these are these are statistics from CPM group's 2026 gold yearbook. You can see on an annual basis the supply is around uh the demand for for gold is is around 10 million ounces this year estimated 11 and a half million ounces last year 16 million ounces in 2024. It's come down in terms of jewelry and giftware uh demand uh as the price has risen and as investors have been investing more in small bars and coins and medallions. So you see the investment demand figures rising from 6.6 million ounces in 2022 to 9 million ounces last year and we expect it to be a little bit higher this year.

[00:09:53]These projections were made before Mr. Mod's uh comments on the weekend. Uh but you've seen the jewelry demand shift from you know 17.9 million ounces down to around 11.6 million ounces last year.

[00:10:07]Part of that is a function of the higher price. But part of it is this shift away from investing in jewelry and decorative objects and investing in more uh traditional if you will uh investment forms of coins and bars.

[00:10:27]That's the situation in India. Looking at US inflation, you can see that headline inflation shot sharply higher in March and in um April. You have to put it in perspective here. The sharp increase in March was the 3.3 million uh percent year-over-year and the April increase was the 3.8. That is much lower than the 9% we saw at the peak in 2021 2022 and even much lower than the 14% that we saw in the 1970s.

[00:11:03]But it is still very high. If you strip out the volatile energy and food costs, you've seen uh US consumer price index rise to 2.6 in in March and about 2.8.

[00:11:19]So you are seeing upward pressures on inflation.

[00:11:23]That is why the Fed has shifted you know in August they were saying hey we may be lowering interest rates more often in 2026 and 2027 than we thought. But by March they were saying no we're pro we might even have to raise interest rates because there are these inflationary pressures. It is going to cause uh the incoming Federal Reserve chief to decide does he want to come across as Trump's lackey or does he want to come across as a serious Fed chairman. In the 1970s, we had a couple chairman of the Fed who really were political animals and we saw 14% inflation as a result.

[00:12:07]Paul Vulker came in and said, well, Jimmy Carter hired Paul Vulker and said, "Cure US inflation." And Paul Vulker said, "This will cause a very deep recession."

[00:12:20]And Jimmy Carter said, "It has to be done." It's one of the factors that cost Carter the election. But Vulker came in in 1979 and jacked up interest rates to 21% and killed inflation for 40 years.

[00:12:36]Um we're far from that situation right now.

[00:12:42]But if we have a political lackey as the Fed chief, it's going to be very interesting to see whether or not the other members of the Federal Open Market Commission can say committee can say, "Sorry, sir, but you're wrong. we're not going to vote for lower interest rates because inflation is in fact a problem.

[00:13:02]And even some Republican politicians seem to be vaguely aware that inflation has become a problem if you look at it on a month-to-month basis, which we prefer doing because it shows you actually what's happening in March and April. The year-over-year shows you not only what's happening in March and April, but also shows you the accumulation of the last 12 months of inflation.

[00:13:26]And here you can see that inflation which was running you know 0.1 point 2.3% for much of the peri period of the last year shot up to.9% month-to-month change in March and stayed high at 6% uh in in in uh a April and again this is headline inflation so that is what we have right now we will be coming out with our silver yearbook on May 27th and our platinum yearbook uh platinum group medals yearbook will come out in July. It's all I have for you today. You can go to our website. You can pre-order the silver and platinum books. You can order the gold yearbook which is came out in March. You can subscribe to our precious metals or base metals advisories. You can send us a note at [email protected] if you want us to talk to you about ways that CPM groupoup can help you uh manage your precious metals and commodities investments more efficiently. In the meantime, take care of yourself. Take care of those around you. Try to do something good for the world. As you can see from our presentation, there are a lot of bad things happening in the world.