If that happensThat would unleash a new set of issues depending upon the exact policy . On the face of it , it would be a political suicide . The backlash wold be severe irrespective of the fine print . The rest would depend upon the fine print . If the policy puts restriction on further purchases , it would lead to large scale smuggling and a blackmarket and we will get back Bollywood goldsmuggling villains of yore . Confidence would erode in Rupee further leading to spike in silver consumption and possible flight of some capital . If the policy aims only at declaration but allows free consumption and purchases going froward the impact would be little lower in terms of economics and behavior but still intense interms of backlash , imho . The fear would though be permanent altering behavior .