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« Gold Up in Hong Kong | Main | High River Gold (HRG) Undervalued? »

Sri Lanka Boosting Gold Reserves

Sri Lanka Flag.JPG

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.

Got a comment – then fire it in.

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Reader Comments (4)

As mentioned last week, those COMEX options price manipulations as seen last week are becoming increasingly innocuous...I believe some of those BIG BANKERS and FEDS will be refilling their NEXIUM presciptions LOL...Snakeman

Rock on gentlemen!

The Snake Breeder

November 7, 2009 | Unregistered CommenterSnakeman

Fireworks is right! I love the video on youtube called "Gold vs. the Dollar" - what a great explanation of why precious metals work as the best currency. Their explanation using a silver quarter really struck home for me. It's only about 4 minutes long, but what an education!

November 8, 2009 | Unregistered Commenterbankruptcy records

I am curious though: what will happen after they break the currency, and you have to trade your gold for the new currency? Will you get the increase in value, or will they set a price that is absurdly low under the guise that the new currency is worth "So much more" than the old one? Maybe that one will be an "unintended result" (as opposed to the unintended consequences we've been dealing with).

November 8, 2009 | Unregistered Commenterbankruptcy discharge

The real issue, in my opinion, is what can only be called the impending risk of the United States filing bankruptcy. Just as the guidelines of stated loans disasterously intersected with the guidelines of no doc loans, we now have the oncoming integration of 'the needle' of sovereigns rush to buy 'real' assets with the 'balloon filled with bills' the U.S. has inflated. We all wondered what would insite the potential 'run' to get out of dollars... I'd venture to say few if any foresaw that it would be a global move toward the relic everyone claims gold to be.

November 9, 2009 | Unregistered Commenterfiling bankruptcy

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