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« Gold, the IMF, and Dirty Jokes | Main | Agnico-Eagle Mines Limited: Outperforming SPDR Gold Trust »
Wednesday
Feb242010

India to Buy IMF Gold

Reserve Bank of India.JPG

Well thats according to an article carried by the Emirates Business today, the rational being that unlike China who can boost gold reserves internally, India needs to import gold in order to boost supplies.


Gold prices are expected to stabilise with the imminent purchase of gold by India from the International Monetary Fund (IMF).

India's central bank, which has increased its gold holdings to diversify its reserves, looks set to be a buyer again when the IMF begins selling 191.3 tonnes of the precious metal amid volatility in major currencies. Gold prices climbed steadily late last year to touch an all-time high of $1,226.10 an ounce on December 3 after the RBI announced in November it had purchased 200 tonnes of IMF gold.

Prices have steadied just above $1,000 recently, edging up to $1,107.30 an ounce yesterday, after falling one per cent the previous day.

The uncertain outlook for two of the world's major reserve currencies – the dollar and euro – provides a spur for central banks, including India's, to buy gold.

India's gold holdings lag those of major economies despite a big purchase in October.

"India is no stranger to gold. The government is gearing up for growth and wants to recalibrate its reserves," said Mark Pervan, senior commodities analyst at ANZ.

"They can't lift their gold holdings from domestic output, unlike China. And they have shown an appetite to buy in the past."

We guess its now a question of watch this space to see just who steps up to the plate.

Footnote: Please don't forget to vote on whether you think gold is going to $1000/oz or $1200/oz first as per the Peter Grandich challenge.


All the best.

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Reader Comments (6)

Don't do it.

If you understand how the strings are pulled, and can keep an eye on that as well as changing conditions and other signals, there's a lot less risk in investing and a lot more profit to be had. Speculating from any angle, while ignoring the others makes investing very risky.

Those who bought gold in 2001 knew what they were doing, and they're hoping to ride this out as close to the peak as they can. However, the dollar is steady despite speculation against it for several reasons, some more obvious than others. These investors haven't made their money yet, all they have done is bought gold and driven the price up. The price is high, but to bring home a profit, they have to sell, and sell fast. Banking on speculation that ignores these conditions, and hoping to ride their golden calf until early to mid 2011 is a mistake that's going to cost a lot of investors an absolute fortune.

February 24, 2010 | Unregistered CommenterJames Hovland

Every commodity has its own cycle, and gold will also about to make the same. This years high will be the Top of it.crude made the same in 2008, nickle made it in 2007, and now it is turmn of gold. US is recovering form its recession period which will result appreciation of US Dollar and end the gold Journey.

February 25, 2010 | Unregistered CommenterPradeep Sharma

Thanks James, you have written a lot, but said absolutely nothing..way to be ambiguous.

February 25, 2010 | Unregistered CommenterDavid Hume

Pradeep,

We think the worst is still to come for the US economy and the dollar is stronger because the euro is all at sea due to the PIIGS being in a real mess.

February 25, 2010 | Unregistered CommenterGold Prices

It's just a way to up the value of Gold, get all from the Indians, then devalue it. Bingo all gold theirs. Also, heard from an Italian gent, while the other one with him looked visibly uncomfortable/upset with him divulging the fact that the Vatican's Euro is more valuable than the other Euro. Until then, I never knew 2 exsisted. True? Again, all gold (item of substantial value) out of the last people (Indians) who have it. Indians, hold on to your gold. Wake Up!!

February 26, 2010 | Unregistered CommenterHmmmmmm

Enjoy your bubble.

February 27, 2010 | Unregistered CommenterJames Hovland

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