Some may buy it as an ornament, some may buy it as a tradition while some may even buy it as an investment. Whatever form this metal takes, its shine can disguise the black dirt left behind. But, after digging deep enough the crime finally comes to light….
#1. Because gold is the new black:
Post demonetisation, when high denomination notes became dysfunctional, people rushed to buy gold to hide all their black money. One such instance happened at Delhi’s Kutcha Mahajani—the wholesale jewellery market where people came from all over India to buy gold. And to avoid paying additional taxes, they didn’t even take a genuine receipt for their purchase. In another desperate instance during this period people even bought gold at a higher price than the official rate. (Rs. 38000 compared to the official price of Rs. 30,000). One of the factors that made all this buying easy was a tiny loophole which allowed people to buy gold up to 2 lakhs without submitting their PAN details. And for purchases higher than that, jewellers even offered split bills!
After a few months according to data reported by the Enforcement Directorate at least Rs. 20,000 crore of money had been converted into Gold in November 2016. This month also reported a rise in gold imports by more than 10-13 tons compared to the same period in the previous year. It was clear that people were trying to colour their money from black to gold and jewellers were benefiting from this surge of customers.
#2. Because gold can be addictive
Unlike other countries that are on the lookout for ‘drug smugglers’ India is constantly being plagued by ‘gold smugglers’. In an attempt to bypass import-export laws and taxes many people have resorted to creative ways akin to drug smugglers to bring gold to India. The reason being all Indians rich or poor LOVE their gold, so when the government tried to impose a heavy duty on gold imports dealers and customers figured a way to escape this tax. According to this BBC article, an estimate of 700kg of gold is smuggled into India every day. In a bizarre instance of gold smuggling, a passenger traveling from Dubai was caught at Delhi airport with about 755 grams (1.7 lbs) of solid gold staples painted grey! And officials smelt a con because the cardboard boxes with the passenger were unusually stapled more than necessary. From gold in their underwear to even swallowing it there’s nothing smugglers haven’t tried. And to curb this smuggling Mumbai customs also offered a reward of up to Rs. 50,000 per kg of gold. Ironically this reward money is Rs. 20,000 more than the reward to cocaine and heroin smugglers!
#3. Because its shine is often blinding:
It’s really difficult to measure the purity of gold or check for authenticity. One has to just trust the jeweller for its word. But this has led to many cheating cases and scandals that have blinded customers. One example is of rural people who buy gold jewellery to hedge themselves against inflation and mortgage it with their jeweller when they need urgent cash. Little do they know that very often these jewellers take wax impressions of the mortgaged jewellery, smelt it and recast it into a similar ornament. When the owner comes to pay off his debt with interest they often end up getting fake jewellery instead of the original and one can barely notice any difference. Another example is how goldsmiths in the past have added cheaper powdered gold called iridium to increase the weight of gold. Not to forget there have also been instances of fraudulent gold investment schemes that promised high returns to customers. Example the Gold Sukh scam which duped over 1 lakh investors of Rs. 200 core in the name of gold investing.
This just shows how gold has often blindsided people into buy and investing in it.
#4. Because it’s a great ‘gift’:
Since gold can easily be passed on as ‘traditional possessions’ it’s often used as a bribe by fraudulent people. Case in point being the Nirav Modi scam where gold and diamond jewellery was used to bribe a bank official to carry out the $2 billion fraud. In another instance, politicians have also used gold as a bribe to garner votes, especially women voters. Even God has been offered gold in exchange for ‘VIP Darshan’ at this temple in Tirupati.
It’s because of all these perks people in India love Gold. And they’ll continue loving it for years to come!