By Dan Ferris in the S&A Digest:

Speaking of crackdowns on commodities, the mob in India, the world's largest bullion consumer, is cracking down on gold. The government doubled import taxes on gold and silver as it looks to fight poverty and raise funds to build roads, bridges, and other infrastructure projects. Gold bars will carry a tax of 200 rupees ($4.10) per 10 grams. Silver will be taxed at 1,000 rupees per kilogram. Gold imported as jewelry or any other form will be taxed at 500 rupees per 10 grams.

India's bullion imports are already down 55% from last year, and the additional tax burden will cause the remaining to "evaporate," according to the Bombay Bullion Association - a Mumbai-based group of traders and jewelers. India bought 51.8 metric tons of gold from January to May, compared with 115 tons last year.

Crackdowns just push markets underground. Gold is too important to the Indian culture. They'll develop a black market and quick.

The World Gold Council agrees... Director Dharmesh Sodah said the taxes will undoubtedly "hamper" demand, possibly leading to black-market trade... "There is evidence from other key gold markets around the world that higher taxation regimes can lead to the trading of gold along nonofficial channels."

And what's more romantic than gold smuggling? It sounds like something out of an old movie or a dime novel.

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