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Published On: Fri, Apr 17th, 2015

India Sets New Precedent in Gold Market

India-gold-demand-2013-Q3TND Guest Contributor:  Nathan McDonald | Sprott Money Blog |

India, known for its close connection to precious metals and the value its citizens place on the noble metal, has always been one of the world’s largest consumers of gold, despite the best wishes of its government to disconnect its people from the yellow metal.

In the face of persistent sanctions on the importation of gold into the country, India’s largest jewelry manufacturer, Rajesh Exports, is taking an unprecedented step in the gold market.

No longer are they content to purchase gold on the open market.  Rajesh Mehta, the billionaire who owns the company, is taking matters into his own hands and has begun to acquire the mines himself.

The focus at the moment is on mines in Australia, a country where the billionaire is currently focusing on expanding sales and creating a closer relationship.

At the moment, Rajesh is looking to accumulate $700 million worth of mining assets. In the past, the company has been a large importer of gold from Australia.

With this step the company has effectively circumvented the government of India’s draconian importation laws that surround gold. Another example of how government can’t keep the free market down forever.

This action will add directly to the company’s bottom line and increase control over India’s gold market. No longer will they be at the whim of the open market in their ability to acquire gold, a commodity that is known for its tight supply and growing demand by Eastern Central Banks.

The untold effects of this development are yet to be seen, yet it is not hard to ascertain what may unfold. Other large manufacturers of jewelry and consumers of gold are undoubtedly going to take notice, if they begin to acquire mines as well, then we could be looking at a full blown gold race.

Already all gold currently mined that is placed on the open market is bought and accounted for. If mines begin to disappear in a significant way, because manufacturers begin buying the “cow” rather than the “milk”, then the price of gold will explode higher, as demand will still remain, yet availability will be greatly reduced.

This action by Rajesh Exports, is just one more example of the stellar fundamentals underlying the physical gold market. Forget about the abysmal paper market and focus on the facts. The future for gold is bright indeed.

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Nathan McDonald writes for Sprott Money Blog, part of Sprott Money Ltd., a leading precious metals dealer selling gold coins, silver coins and bullion bars online and over the phone. As one of Canada’s largest owners of gold and silver bullion, the company’s goal is to facilitate ownership of precious metals no matter how big or small the portfolio. cropped-smblog_header_v6 TND full (1)

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