If you were watching the Sochi Olympics opening ceremony you saw a curious sight. The team from India was forced by the International Olympic Committee (IOC) to enter into the stadium without their flag. Instead they carried the Olympic flag and entered as “independent athletes.” The brouhaha started when the Indian Olympic Association’s (IOA) election process was allegedly manipulated by the government, putting an accused fraudster among the association’s leadership. With that, the IOC banned the Indian athletes from competing from India. Eventually the IOA held new elections and by the end of Sochi the Indian athletes were allowed to wear their national colors. But none of them won a medal, and certainly none brought home gold.

In another boneheaded move last summer, the Indian government moved to restrict imports of gold by attaching re-export quotas to importers’ purchases. This followed numerous import taxes that had been levied on the yellow metal. However, since India is far and away the largest demand market for Indian gold jewelry, the quotas necessarily put a crimp on imports of gold when importers couldn’t guarantee that 20% of their imports would be exported again as higher value goods.

Restrictions initially hit gold imports pretty hard. The World Gold Council measured a 52% drop in gold imports to India (in tonnes) from the second to the third quarter of 2013. Of course that total probably misses much of the black market that has developed for gold in India since the restrictions were implemented. Did continued government intervention in the gold market cause Indians to abandon their love for gold or its place in their culture? Of course not. Like all people through history faced with import restrictions on something they love, the Indians began smuggling gold over the border, or finding loopholes in the law with which to get around it.

In a couple of the most comical (and costly) cases of smuggling brought to light, gold was found stowed away in airplane bathrooms. One haul found in October was valued at $1.9 million, and another found in November was valued at $1.1 million. Can you imagine the smugglers whose gold was confiscated?

At this point the Indians are starting to find even better ways around the law than smuggling gold in airplane toilet compartments. It turns out that with a population as large as India’s, a country will tend to have a large number of migrant workers. According to the World Bank, in 2012 India’s migrant worker remittances were the largest in the world at $69.4 billion. That’s more remittances than the third, fourth and fifth ranked countries combined. India had over 11.3 million citizens working abroad as migrant workers in 2010. A loophole in the gold law allows these migrant workers, flush with cash they’ve saved for their homecoming, to bring a kilogram (about 32 ounces) of gold home with them. A Calicut customs official told The Wall Street Journal that whole families are walking through customs with pockets stuffed full of gold. So Indians are bringing home the gold, one ounce at a time over the border as paid couriers.

But couriers are still forced to pay a tariff, and that tariff was raised on February 28 by about $37 per troy ounce of gold imported. Having failed to stop the flow of gold across the border, it appears the Indian government is trying to make the gold so expensive no one will want to buy it. And if they do continue to buy, the government will gladly take a larger payment for its troubles.