Hot on the heels of the Indians the Sri Lankans have wasted no time in turning to gold in order to boost their own gold reserves in favour of the once all mighty US dollar.
We draw your attention to this snippet taken from Yahoo News:
The price of gold hit a record high above 1,100 dollars an ounce in trading here on Friday following a report that Sri Lanka had joined India in purchasing the precious metal in favour of the US currency.
"The Central Bank of Sri Lanka has announced that it is buying gold to diversify its reserves," industry body the World Gold Council (WGC) said in a statement issued before gold struck a record high of 1,101.42 dollars.
It later pulled back to stand at 1,092.65 dollars an ounce in late London trading.
Gold had struck a series of highs already this week after the IMF said it had carried out a massive sale of the precious metal to India.
"Over the past year central banks, which have been net sellers of gold are now a new and increasingly important source of demand," WGC chief executive Aram Shishmanian said in the council's statement.
"This latest announcement demonstrates that many central banks are reassessing their reserve asset management policies."
To read the article in full please click on this link.
We can just imagine the meeting rooms stuffed full of suited central bankers conducting policy reviews on their reserves, the heat is being turned up as the penny slowly drops that they are actually on the wrong horse. Their faith in paper that is paying little or nothing as an investment and buys less and less as the days go by is the stuff that stomach ulcers are made of. The big players are moving towards the exit and as each one passes through the door the momentum will gather with the others moving faster and in greater numbers to re-position themselves.
Some will move into gold not because it is the right thing to do but because they have seen others do it and presume that the 'others' must something that they don't and so they follow. The 'safety in numbers' theory could work to our advantage as the herd tries to enter what is a fairly small investment space.
Prepare for fireworks in the precious metals arena as the sparklers have been lit and the rockets are approaching the launch pad.
Have a good one and stay calm.
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