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While gold prices have been struggling in U.S. dollars, the story's been quite different in India.

On the night of the U.S. election, Indian Prime Minister Narendra Modi shocked his country by announcing that larger denomination rupee notes would no longer be legal tender. Indians now have until the end of December to exchange those notes at banks.

Suddenly, 1,000 rupee notes could only be sold to middlemen who had some way of exchanging large quantities of the notes at banks, for just 750 rupees. Many Indians flocked to gold to dump their soon-to-be-worthless cash. But because of the new discount on paper money, they had to pay a premium to the global price.

That meant they were paying the equivalent of $2,000 for gold in rupees. When there's too much cash, limited gold, and soaring demand, the price has only one way to go, and that's up.

http://moneymorning.com/2016/11/18/where-the-price-of-gold-is-headed-now/

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Indian Gold Import Ban: Fact or Fiction?

By Daniela Cambone of Kitco News
Wednesday November 23, 2016 13:12
(Kitco News) - Prime Minister Narendra Modi’s move to ban 500 and 1,000 rupee notes caught the country by surprise, with many Indians now looking to liquidate their stockpiles of cash. Internet chatter is now a flurry, with some wondering whether the government’s next step will be to ban gold imports and prevent Indians from cashing in “black” money.

"The Indian financial market is in chaos right now – India, like the U.S. and Germany have a lot of people who produce newsletters on the internet that are not necessarily based on fact but rather contain extreme theories and rumors." Jeff Christian, Managing Director, CPM Group

Nigam Arora, chief investment officer of the Arora Report, said he is taking the potential ban seriously. “We took this rumor seriously and incorporated it in our models that gave the sell signal in gold right after the U. S. presidential election,” he wrote in a MarketWatch commentary.

http://www.kitco.com/news/2016-11-23/Indian-Gold-Import-Ban-Fact-or-Fiction.html