COVID-19: How gold smugglers stand to gain

Customs officials are busy at ports and airports, scanning passengers to ensure that COVID-19 virus-affected people are traced.

So, officials are not able to focus much on baggage checking.

This could lead to more gold getting smuggled into the country as luggage check at airports is now random unlike earlier where every bag was checked thoroughly.

Screening of passengers from overseas, owing to the coronavirus (COVID-19) outbreak, has shifted from baggage to people. This is leaving room for higher smuggling of gold through the luggage.

A Mumbai customs official said, “Customs officials are busy at ports and airports, scanning passengers to ensure that COVID-19 virus-affected people are traced.

"So, officials are not able to focus much on baggage checking.”

The official added, “This could lead to more gold getting smuggled into the country as luggage check at airports is now random unlike earlier where every bag was checked thoroughly.”

Bullion market is quoting gold price at a discount to the cost of import.

In the unofficial or the cash market, gold is quoting at a little higher discount following inflow of unofficial gold.

Sources said even as demand is much less, official imports for domestic market use has reduced sharply in this month so far.

He, however, said that inflow of unofficial gold is rising in order to meet the demand.

Domestic market imports officially are expected at around 10 tonnes only, according to analysts.

Market sources said demand for gold is so low that consumers are not coming because of volatile prices.

The current ‘inauspicious period’ of gold buying will continue for one more week.

As a result, the yellow is trading lower than its cost of import.

Even on Tuesday morning in Mumbai, discount was 0.5 to 1 per cent. The discount has fallen with fall in prices. On Monday, discount was higher.

Even those selling gold and silver against cash in the unofficial market are charging 3 per cent for GST.

Later, these cash deals are brought on books by paying GST and showing them as cash sales.

However, sources maintained that the parallel cash market in Mumbai was quoting gold cheaper by 1-1.5 per cent than official prices on account of rising (unofficial) flows.

Unofficial market discount is higher compared to cost of official imports.

A large chunk of unofficial gold was moving to smaller cities to escape the authorities’ glare.

Photograph: Ajay Verma/Reuters