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Even as Jim Rogers may not have meant it, the blame for gold rout falls squarely on the Finance Minister of India.

09 Jul 2013

By Rakesh Neelakandan
Jim Rogers loves India and Indians! And I am pretty much sure that he has got nothing in the world against Palaniappan Chidambaram, India's Finance Minister.

But when it comes to the iconoclastic gold rout; the downfall in gold from 2011 highs of $1900 to the recent $1200, India's import curbs has got a direct role to play, said Jim Rogers, the living legendary investor.

“...India has a huge balance of trade deficit. The largest drivers are oil and gold. You can't do anything about oil so the Indian politicians are blaming their problems on gold. And they've taken many measures, and more measures are coming to diminish or even eliminate the import of gold,” said Jim Rogers to Business Insider in an interview. “...that was the main catalyst or the straw which broke the camel's back which made gold start going down finally, after 12 years of going up.”

Given the fact that India is the biggest consumer of gold in the planet, the argument does make sense. And even as Jim Rogers may not have meant it, the blame falls squarely on the Finance Minister of India.

Chidamabaram,caught between the devil of gold on one side and the roaring high seas of crude oil prices on the other has decided to take on the devil first.

"India does not produce an ounce of gold. You pay in rupee, but the government has to spend dollars to buy gold,” Chidambaram had said recently. "I do not buy gold. To think that gold is the safest investment is wrong," the finance minister said and was quoted by the Times of India as saying.

India recently hiked the import duty on gold to 8% and RBI too put in restrictions on import funding by banks. Chidambaram, as his words suggest, is an active campaigner of anti-gold front.

Meanwhile, the gold curb measures 'helped' the gold imports by India to come down substantially as latest data say.

"Import of gold and silver is understood to have declined substantially to $2-2.5 billion in June, much below the $8.39 billion imported in May, and over $7 billion in April," a senior government official said and was quoted by the Indian Express as saying.

June imports of Gold have dipped to a paltry 28 tons when compared to 162 tons in May. Data says that imports of gold to Gujarat, a major consuming centre, dipped to 3.73 tons in June against the 37.61 tons registered in May as per the air cargo complex data.

While one cannot ascertain if gold imports by India would be met with added curbs especially in the light of pending festive demand in H2, 2013; the Finance Ministry here is sure to lose sleep over the matter as Rupee rout continues.

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