Beyond the Acid: The Murky Gold Trade Loophole Costing India Millions 

Perth Mint’s $328 million exports of gold chloroauric acid to India exploit a legal tariff loophole, potentially costing Indian taxpayers millions. While the acid has legitimate industrial uses, its easy conversion into gold bullion allows importers like Hindustan Platinum to bypass India’s 6% bullion import duty. The Perth Mint defends its partnership, citing customer assurances of proper use and LBMA accreditation, but experts confirm the systemic vulnerability to “tariff arbitrage.” India’s own policy center admits the loophole invites exploitation, urging standardized precious metal tariffs.

This trade persists amid soaring gold prices and the Mint’s recent compliance scandals, highlighting how regulatory gaps enable profit-driven maneuvers that drain national revenue. Ultimately, India must reform its import policies to close this costly legal grey area.

Beyond the Acid: The Murky Gold Trade Loophole Costing India Millions 

The soaring price of gold in 2025 (up nearly 30%) has intensified a global scramble for the precious metal, exposing ingenious – and perfectly legal – methods to bypass national tariffs. At the centre of a significant controversy sits Australia’s Perth Mint and its multi-million dollar export of “gold chloroauric acid” to India, a substance easily converted into pure bullion, raising serious questions about lost tax revenue and the integrity of international trade. 

The Acid Shortcut: Turning Liquid into Gold 

Gold chloroauric acid is a liquid solution containing dissolved gold. Transported in plastic cartons, it’s a crucial industrial chemical used in refining and electronics. However, it possesses a unique characteristic: with relative ease, the gold within it can be extracted and reconstituted into standard gold bars or bullion. This physical property becomes a financial loophole when tariff structures differ. 

Here’s the crux: Under the Australia-India free trade agreement, importing physical gold bullion bars into India attracts a 6% tariff. Importing gold chloroauric acid, classified differently, incurs significantly lower duties. The potential for “tariff arbitrage” is immense. Traders can import the acid, extract the gold, sell the bullion domestically, and pocket the difference saved by avoiding the higher bullion tariff. Estimates suggest India could be losing millions in uncollected revenue on these Perth Mint shipments alone, valued at over $328 million since early 2024. 

Perth Mint’s Position and India’s Dilemma 

The Perth Mint maintains it is acting responsibly. It states it only supplies the acid to a single, accredited Indian customer – Hindustan Platinum – and has received assurances the product is used strictly for legitimate industrial applications. The Mint emphasizes its compliance with “know your customer” (KYC) rules enforced by Australia’s financial crime watchdog, AUSTRAC, particularly after past scandals involving gold purity and compliance failures. 

Hindustan Platinum, described on its website as a leader in high-purity precious metals and industrial products, has remained silent on how it uses the acid. This silence fuels concerns raised by Indian experts like Sundaravalli Narayanaswami, Chairwoman of the India Gold Policy Centre. She confirms the loophole is well-known and “very legal” under current Indian regulations, urging the government to standardize tariffs on all imports containing precious metals to prevent exploitation. 

“The system is open to exploitation,” Narayanaswami states bluntly. “Traders of large volumes exploit the system for tariff arbitrage.” 

Scale, Scrutiny, and the Shadow of History 

The scale of the operation is substantial. Export records reveal dozens of Perth Mint shipments, each exceeding 300kg of the acid, flown on special commercial flights to India over the past 18 months. While legal, the sheer volume and the nature of the product inevitably draw scrutiny. 

This scrutiny is amplified by the Perth Mint’s recent history. The institution, owned by the West Australian government, faced major scandals involving selling gold bars that failed to meet the Shanghai Gold Exchange’s purity standards, leading to a costly independent review and an AUSTRAC investigation into its compliance systems (only recently resolved). This context makes the current acid gold trade particularly sensitive. The WA government states it is aware of the trade and has been assured by the Mint of its legitimacy, but relies on the Mint’s own due diligence. 

The Bigger Picture: A Global Game of Cat and Mouse? 

The Perth Mint-Hindustan Platinum deal highlights a persistent challenge in global commodities trading: regulatory lag. As Narayanaswami points out, governments often create tariff differentials for legitimate industrial reasons, but sophisticated traders rapidly identify and exploit the gaps for pure financial gain. This isn’t isolated to India; similar loopholes emerge worldwide wherever valuable commodities face complex import regimes. 

Why This Matters to You (The Real Human Insight): 

• Lost Public Revenue: Uncollected tariffs mean less money for Indian public services, infrastructure, or debt reduction – ultimately impacting citizens. 

• Market Distortion: Tariff arbitrage undermines fair competition. Legitimate bullion importers paying the full 6% duty are disadvantaged against those using the acid route. 

• Integrity Concerns: While legal now, such practices test the boundaries of trade agreements and raise ethical questions about corporate responsibility, especially for a government-owned entity like the Perth Mint with a recent tarnished record. 

• The Innovation Challenge: This situation exemplifies the constant cat-and-mouse game between regulators trying to protect revenue and traders finding innovative (if arguably exploitative) ways within the letter of the law to minimize costs. Closing such loopholes requires constant regulatory vigilance and adaptation. 

The Path Forward 

The ball is firmly in the Indian government’s court. Experts have long advocated for harmonizing tariffs on all gold-bearing imports to slam this particular loophole shut. Until that happens, or until irrefutable evidence emerges proving the acid is being converted into bullion for tariff avoidance, the Perth Mint’s lucrative exports will continue – a perfectly legal trade casting a long shadow over potential lost revenue and the ongoing struggle to ensure fairness in the glittering, high-stakes world of international gold. The story is less about illegality and more about the unintended consequences of complex regulations and the relentless pursuit of profit within their grey areas.