Bullion backwash

Earlier this year the Indian government imposed quotas and increased taxes on gold imports, but it takes more than that to limit Indians’ love of gold. Although the country’s statisticians report that Indians officially buy a lot less of the precious metal—148.2 tonnes from July to September, a third less than in the same period last year—there has been a surge in gold smuggling.

Customs officials at airports in India, Nepal and Bangladesh are reporting a spike in seizures of gold originating from places such as Abu Dhabi, Bahrain and Dubai. What happens along India’s 15,000km land border and 7,500km coastline is anyone’s guess. But the effects of India’s attempts to curb gold imports are most widely felt in Thailand.

With India’s market ring-fenced, more physical gold has made its way to Thailand. In the most recent quarter demand from Thai consumers surged 125% compared with the same period last year, to nearly 36 tonnes—faster than in any other country. And demand from investors has grown more than 80% this year. The World Gold Council attributes the increase “in no small part due to Thailand being used as a route to channel gold into other markets, notably India and Vietnam.”

Read More: www.economist.com/blogs/schumpeter/2013/11/gold-trade-thailand