In India's biggest bullion market, Mumbai's Zaveri Bazaar, gold dealers are busy not filling orders for customers, but busy avoiding phone calls because they don't have any gold to sell.
Battling a huge trade deficit and a weak currency, the government has taken various steps this year to make it harder and more expensive for Indians to get hold of gold, the biggest item on the country's import bill after oil. Hardly any gold came in for two months until mid-September and industry is still feeling the pinch, especially now the festival season has started, a peak period for demand.
In the bazaar, jewellers wander around trying to get hold of a dealer who can find them gold right away, and wholesalers ask the same of banks. Retailers in half-empty showrooms try to dissuade customers from asking for immediate delivery.
"Even if someone wants 10 kg, we don't have the stock. So much so that we have stopped attending client calls," said Gautam Arora, a wholesaler, who ignored at least five phone calls during a 40-minute conversation with Reuters.
The government has set a record 10% import duty on gold and imposed a rule that requires 20% of imports to be re-exported, meaning importers need to find a buyer who will guarantee those exports before bringing in any gold.
The complexity of the rules and sagging exports down 60% this year have caused supplies for domestic use to dry up.
Banks are required to supply three-quarters of the 20% meant for exports before delivering the 80 percent that will be for domestic use. Turnover at RiddiSiddhi Bullions Ltd (RSBL), the country's largest bullion dealer with 110 employees, has dropped to 20-30 kg a day from about 300 kg since the new rules kicked in.
"This is due to the government policy. I don't know what they are thinking," RSBL director Prithviraj Kothari told Reuters from his Zaveri Bazaar office.
The shortage of the metal sent Indian gold premiums to more than $100 an ounce over London prices this month when demand far exceeded supply due to the Dussehra festival, one of several connected with harvests and invoking Lakshmi, the goddess of wealth. The related festivals of Diwali and Dhanteras fall in the first week of November.
"New imports for domestic use could start in the next 10-15 days, which could coincide with Diwali and Dhanteras. But despite new imports, the supply situation will be