India's Gold Buyers Flock to Shadow Trade for Savings
Gold prices in India have surged to new heights this year, reaching record levels earlier in the year. With prices remaining almost 28% higher than a year ago, many Indians are turning to the shadow trade for savings.
Bulk buyers can shave off as much as 6% from prevailing market prices by buying gold without receipts, according to five people familiar with the trade. Dealers accepting cash can sidestep taxes and pass part of the savings on to customers.
Anuradha, a 55-year-old homemaker, bought ornaments for her daughter's wedding at a discount of ₹5,000 for every 10 grams without taking a receipt. The savings were too hard to ignore after gold prices surged.
The resurgence in the unofficial market is an unintended consequence of a policy designed to curb India's appetite for gold. The government more than doubled import levies on gold and silver to 15% as part of steps to curb purchases, which has led to a ballooning trade deficit.