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First, we learned that India’s new Goods and Services Tax on gold would be only 3%, not the feared 5% to 10%.

Now, we hear that India’s Trade Ministry is hinting that the crippling 10% import duty on gold could be cut back sharply, or even repealed. Manoj Dwivedi, joint secretary at India’s trade ministry, told reporters in Mumbai (formerly Bombay) last week that an import cut back will be “one of the strong recommendations on the budgetary side from the ministry.”

He said “the ideal rate for the industry is 2%,” adding that “It can be brought down in a phased manner or in one go.” This move would make gold more affordable and it would cut back on the motivation behind India’s huge gold smuggling business.

In China, rumors of a devaluation of their currency (the yuan) has motivated Chinese citizens to buy and stockpile gold coins and bars. Chinese investors are also concerned about the volatility and periodic crashes in their domestic stock market and real estate markets.

Gold seems to be the one safe haven left. Chinese demand for gold bars soared 51% to 158.4 metric tons in the first half of 2017. Zhang Yongtao, Secretary-general of the China Gold Association, projects that Chinese gold demand could reach a four-year high of 1,000 tonnes by year’s end. If so, they could reclaim their #1 spot in gold demand for 2017.

Meanwhile, the top three nations for central bank gold demand are neighbors: Russia, China and an old Soviet breakaway state, Uzbekistan, which is quietly creating a world-class economy.

According to a mid-year report by the World Bank, “Uzbekistan has the second-fastest growing economy in the world, with projected growth of 7.6%, thanks to rising oil prices, benign global financing conditions, robust growth in the Euro Area, and generally supportive policies among governments of several large countries in the region.” The World Bank projects even faster GDP growth in Uzbekistan in 2018 and 2019.

A big part of Uzbekistan’s success comes from mining and socking away gold in their central bank, which they then use to capitalize major development projects. Uzbekistan’s gold and foreign currency reserves now stand at $20 billion, which is enough to cover two years of imports.

Muruntau gold deposit

Also, according to Wikipedia, the Muruntau gold deposit in Uzbekistan is “the world’s largest open pit gold mine,” with production on the order of two million ounces per year and with “about 170 million ounces” in reserve.

The mid-year report from Thomson Reuters GFMS (formerly Gold Fields Mining Service) said that gold demand rose 17% in the first half of 2017 to reach 1,895 metric tons (tonnes), despite a sharp drop off in demand for gold exchange traded funds (ETFs), which fell 75% from 569 to 145 tonnes.

In the two biggest markets — India and China — India’s demand nearly doubled to 307.6 tonnes, pushing India into the #1 spot for global demand after years of China’s leadership in gold demand (and supply).

Gold jewelry fabrication rose 22% in the first half of 2017, according to the report Gold Survey 2017 H1 Update & Outlook. Supply declined 5%, they said. Mine production was slightly down (-0.2%) with notable drop-offs from mines in China and Australia, the two biggest gold producers in the world.

The seasoned gold investors of Asia will likely keep gold prices high, with the trend-following New York traders probably getting back on board the gold ETF bandwagon once prices penetrate $1,300 or higher.

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