Recently I was at the Sovereign Man Entrepreneur camp, a four day non-profit camp that brings select entrepreneurs in as mentors and 50 select students from all over the world to the little known country of Lithuania to share know-how and build relationships.
A few individuals from India kept asking which regulations they have to overcome to buy and store gold and silver in Singapore. I have received similar inquiries from other Indian nationals and I often get incredulous or suspicious stares when I state that there are no taxes or regulatory limits on buying bullion in Singapore. Nowadays in India, gold has become an escape from the rupee's domain as many Indians and many Indian companies are prevented from sending their savings abroad through capital controls and taxes.
However, as the Indian government further regulates gold as an alternative store of value to the rupee, the metal's appeal is only getting stronger. This development prompted India to ban imports on coin coins altogether. Pakistan has followed suit and banned all imports of the yellow metal for 30 days in a bid to "deter smuggling of gold into India". Given Pakistan's historically tense relationship with India this official explanation seems rather strange.
Reasons expressed concerning the ban of gold and silver are seldom straightforward... after all it would not look good for a government to state "we are afraid that you don't trust our currency, so we are banning gold which you might otherwise be tempted to own instead of our currency".
The U.S. gold nationalization of April 5th 1933, which was unilaterally initiated by President Roosevelt through an executive order without legislative approval, was justified "to prevent hoarding of gold”. The British, during their period of low growth in the 1970s even made it an act of treason to use anything other than the British Pound to settle payments.
Bans on gold or silver are a clear sign that a country is in deep trouble and that the government does not have an effective plan to restore confidence. Within this context, bans, although dimming local access, actually tend to increase global demand rather than suppress it. This is because perceived counterparty risks increase, causing increased flights of safety into gold and silver.
This later phenomenon can be seen by the surge in activity in other Asian markets such as the physical Shanghai Gold Exchange as the Chinese are quietly diversifying their foreign reserves into gold and silver.
Asian demand currently seems to be causing large flows of metal from Western vaults. According to UK Statistics, in May 2013, 7,716,000 troy ounces of gold - 20 times more than normal - left the UK. Often this gold is headed for Switzerland to be re-cast into smaller bars and is then sent to these "wealthy" Asian markets.
These phenomena are all consistent with the ongoing shift of wealth from West to East. Although silver and gold have recovered some of their recent large losses, both metals (especially silver) are still quite inexpensive. Personally I believe this is an excellent time to get your share of physical and keep it for the long term.