Note that with all our currencies maintained (i.e. manipulated) within relatively tight ranges to each other (what our governments call "competitive devaluation") that if gold is (and has been) chronically underpriced versus the Indian rupee then it must also be chronically underpriced with respect to all the other variations of these paper currencies. Presumably the bankers are familiar with the most basic mechanism of free/open markets. Presumably these same individuals actually believe our own markets to be free/open. Yet, when these same individuals continue to fret (and lie about) India's gold deficit the only remedies they can suggest are fraud or manipulation. The manipulation is already a fait accompli. India's government has jacked up the import duty on gold. Or to put this another way, it has artificially raised the price of gold in order to artificially decrease demand. The only possible way to characterize this action is "market manipulation." Now the (proposed) fraud. The other "bright idea" being floated by the media/bankers is to sell Indians more (imported) "paper gold" -- lots more. The obvious question is how can you solve a gold deficit by selling "paper gold" unless one is actually only selling paper, but calling it gold? The fact that some sort of sham is being attempted here is obvious. The only remaining issue is to precisely clarify the nature of that sham. Examining this issue from a technical/legal perspective, there are two ways in which "selling paper gold" could 'solve' a gold deficit. 1) Open fraud: Calling something "paper gold" but selling only paper backed by nothing. 2) Selling "paper gold" that is more or less "backed" by real bullion, but where no actual ownership of gold is being conferred in the sale. In the slippery world of Big Banks and the Western gold market, in fact, we have seen the bankers engaging in both these forms of behavior. Many (former) clients of Morgan Stanley ( MS) will still ruefully recall purchasing "paper gold" from those bankers. These clients were sold bullion "accounts" where Morgan Stanley assured them "their gold" was being safely stored by Morgan Stanley on their behalf, and could be claimed/delivered at any time.