This whole story is sounding more and more like a “plant” for some insidious purpose. As the guest indicated, this decision makes NO SENSE at all in the context of the new government, led now by the nationalistic Mr. Modi, a proudly-proclaiming gold proponent.

Cory,

You mentioned a few times about India shipping their gold out. To be clear they aren’t physically shipping their gold out of India, they are doing a loco swap http://www.perthmint.com.au/education-locoswaps.aspx

As I said yesterday http://www.kereport.com/2014/07/07/gold-swaps-cut-imports-ease-payment-pressure/?replytocom=261455#respond, the point of this transaction is to give the local Indian market physical gold to get them over their current shortage due to govt policies which the Indian gold industry is complaining about.

Why it makes total sense is because it placates their domestic industry without impacting on their current account deficit and without having to change the policy. It is a desperate short term fix to a political problem.