On September 25th, spot gold hovered near its historical high of $2,650 per ounce. So far this year, the price of gold has risen by 25% and has set 25 new historical records. However, the recent rise in gold prices is not driven by inflation but by a combination of complex factors. These factors include significant interest rate cuts in the United States, the dollar entering a depreciation cycle, changes in bond yields, potential turmoil from the U.S. elections in November, the U.S. federal deficit reaching staggering levels, concerns about U.S. fiscal conditions leading to reduced reliance on U.S. Treasury bonds, strong buying by global central banks, and the Middle East situation triggering safe-haven demand. The main buyers behind this are central banks from countries such as India, Poland, and Singapore.

The latest report data released by the World Gold Council on September 12th shows that despite the rise in gold prices, central bank gold demand continued to strengthen in July. The net purchase volume of central banks worldwide in July more than doubled to 37 tons, a month-on-month increase of 206%, setting the highest monthly increase since January (45 tons). This also made the first seven months of this year, with global central banks net purchasing 510 tons of gold, a year-on-year increase of 7%. This is the highest two-quarter data since the global central bank gold purchase quarterly data statistics began in 2000, 71% higher than the average quarterly central bank gold purchase volume in the past five years (1030 tons and 1082 tons in 2023 and 2022, respectively). Among them, Poland is the largest buyer of the month, followed by India. The organization expects that the global central bank's demand for gold will continue in the next few months.

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The report data shows that in 2024, India has become the second-largest gold buyer among global central banks. According to weekly data estimates, the Reserve Bank of India purchased 5 tons in July, which means that the Reserve Bank of India has been increasing its gold reserves every month so far this year. The latest data shows that the Reserve Bank of India has increased its gold holdings by 50 tons this year. Since 2017, the Reserve Bank of India has increased its gold reserves by more than 270 tons. As of July, India holds about 846 tons of gold reserves, accounting for 9% of its foreign exchange reserves, higher than 7.5% a year ago.

Not only that, but the report released by the Indian authorities on September 22nd also shows that the gold import volume in August set a historical high, reaching 10 billion US dollars, more than three times that of July, and the sixth-highest import volume in history. So far, India's gold import volume has surged by 30%, and the World Gold Council estimates that the country has imported 140 tons of gold. At the same time, the monthly inflow of gold funds in India in August also set a historical record of 9.5 tons. Last year, India accounted for about one-third of the global gold consumer market demand and has become the world's second-largest gold bar and coin market, second only to China.

The main driving force behind India's strong purchase and import of gold is that the reliability of the US dollar has weakened, and confidence in US dollar assets has "significantly declined", leading to a significant decline in confidence in US dollar assets around the world, and it may buy more. The historical resilience of gold during geopolitical crises makes it an attractive asset for those seeking to protect their reserves from the impact of such unpredictable events.

Another economist told The Times that considering that the United States has started an interest rate cut cycle, it is expected to隐蔽ly transfer the growing risks of debt default and deficit, and continuously harvest some economies with obvious economic structure and financial debt problems to collect seigniorage. Under the dollar tide effect, the economy, assets, and exchange rates of these markets will continue to be affected, which will make the Indian economy shudder. With the intensification of foreign exchange market fluctuations, the Reserve Bank of India will take action to diversify the asset categories of foreign exchange reserves.

Analysts say that the Reserve Bank of India now finds itself in a tricky situation. Insufficient domestic demand and reduced private investment are one of the main reasons for the slowdown in growth, and banks and non-bank financial institutions are also facing serious non-performing loan issues, which restrict credit growth and economic activity. The consequence of this is that India's debt pressure will increase exponentially, and it has been listed as one of the emerging markets that need to consolidate finances the most by international institutions.

Some economists in contact with our team explained that after more than 30 years of development, although India has become a pole of world economic growth, most of this growth is attributed to Indian enterprises and capital being able to more easily enter the Western world. Now these situations have reversed, and the myth of India's economic growth miracle is being exposed, and it is facing a capital withdrawal tide.Especially the United States, in order to shift its own debt and economic recession risks, has initiated the process of harvesting India's economy and the black hole of financial debt markets.

According to reports, India is the country with the highest debt ratio among all emerging markets. As of the third quarter of the fiscal year 2024, although India's general government debt has decreased compared to the same period last year, it has soared to 78.2% of GDP, the highest level since the second quarter of 2018. These signs all indicate that India may experience a substantial economic recession due to debt dilemmas.

Data released by the Reserve Bank of India on September 9th shows that as of August, India's foreign exchange reserves were $615 billion, a 9.1% decrease from the same period last year. This indicates that despite India losing 16% of its foreign exchange reserves, it still cannot prevent the continued depreciation of its currency, the rupee. This also explains the reason behind the Reserve Bank of India's move in June to transport 100 tons of gold reserves from the UK to expand its foreign exchange reserves.

This indicates that India's response to the pressure of repaying external debts and the continuous depreciation of its national currency, the rupee, will not change in the short term. This has also led to a considerable number of wise investors withdrawing from India in advance in recent times.

For example, most European and American manufacturers who control the profits of India's manufacturing industry have started to withdraw since last year, expressing concerns about India's investment environment, tax disputes, procurement rules that limit competitive choices, and the business environment. Behind this lies the possibility that India often adopts radical measures to disrupt the economy.

Furthermore, in August last year, the Indian authorities suddenly announced restrictions on the import of laptops to promote local production. This measure caused panic in the industry, and such interventionist policies can also dampen investor enthusiasm.

According to the latest data from the United Nations, in 2023, nearly 2,800 foreign-funded enterprises registered in India have voluntarily or forcibly closed their businesses in India, choosing to flee the Indian market, accounting for about one-third of all foreign investments in India. So far this year, 2 trillion rupees of manufacturing investments have withdrawn from India. It is reported that Disney is also considering fleeing from India.

This includes internationally renowned companies such as Foxconn, Tesla, Google, Amazon, Nokia, Samsung, Ford, Coca-Cola, and PepsiCo. Behind this shocking data is that India's economy is experiencing huge fluctuations and tests.

Even according to incomplete statistics from the media, at least more than 190 Indian executives have been fired by American companies this year. Currently, workers at Samsung's southern India factory are continuing to strike to express dissatisfaction with relevant Indian functional departments.

According to data released by Indian official institutions on September 7th, foreign capital, including manufacturing, has withdrawn funds worth nearly 9 trillion rupees from India since India began to tighten monetary policy in 2022. This is more than three times the net outflow during the 2008 US financial tsunami and at least the highest annual withdrawal in 20 years.This indicates that the sustainability of India's economic model is not strong, exacerbating the possibility of a regression in the Indian economy. Coupled with the inability to effectively address the current withdrawal of manufacturing enterprises and the credibility issues arising from the United States' harvesting of Indian enterprises, against the backdrop of a slowdown in global economic growth, India is very likely to regress by 20 years, especially in the manufacturing export industry, which is also one of the reasons why a significant number of wise investors are withdrawing from India.

Because the Indian economy relies on the accumulation of risky loans and foreign debt to expand economic growth, India does not have a broad foreign exchange reserve moat, which is also one of the reasons why India has begun to import a large amount of gold and increase its gold reserves to hedge against the risk of dollar exposure.

At the same time, many countries are also starting a trend of repatriating gold from overseas. The financial team mentioned that, for various historical reasons, more than 60 countries (or international organizations) have stored nearly 7,000 tons of gold in the underground vault of a 12-story granite building at 33 Liberty Street in New York, where the Federal Reserve is located. At this time, Indian media reported an unexpected news.

According to a report on September 21, after the Reserve Bank of India transferred about 100 tons of gold from the Bank of England in the UK to domestic vaults in India by plane in June this year, India still has 413.8 tons of gold stored in overseas vaults in the United States, the UK, and other countries. According to the follow-up report by the Indian media, when the Reserve Bank of India applied to the Federal Reserve to repatriate its gold reserves stored in the United States, it was blocked by the latter on the grounds of "unclear intentions and threats to financial security."

Market observers speculate that the recent continuous harvesting of India by the United States, the withdrawal tide of Indian manufacturing, coupled with geopolitical conflict events, such as the United States and its allies freezing Russian foreign exchange reserves, may have prompted the Reserve Bank of India's decision to repatriate gold stored in the United States. The formal refusal to allow India to repatriate the remaining gold stored overseas from the United States has once again raised concerns about the security of gold stored overseas by various countries.

At the same time, according to the latest data released by the World Gold Council citing the latest data released by Chinese customs on September 20, China imported 45 tons of gold in July, the lowest level in more than two years, a 24% decrease from 55 tons in June. This is because record-high gold prices have suppressed demand in the world's largest gold-buying country. The data shows that from January to May 2024, China imported gold in amounts of approximately 163 tons, 161 tons, 79 tons, 85 tons, and 77 tons, respectively. This also means that by August 2024, China had imported a total of about 665 tons of gold.

This indicates that, based solely on the statistical data published by the World Gold Council and Chinese customs, at least 665 tons of gold have been transported to China in batches from the three major European and American international gold markets of the United States, the United Kingdom, and Switzerland from January to August 2024.