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India, China, Russia and Some EU Central Banks Buying Gold
India's central bank is buying 200 metric tons of gold from the IMF, at $1,045 an ounce.
China, Russia and some EU central banks have also expressed interest in buying gold from the IMF or elsewhere.
Therefore, Bloomberg's article of today saying that "Central Banks Will Become Net Buyers of Gold, WGC CEO Says" is not controversial.
Given that the IMF has only authorized
the sale of 403.3 metric tons of gold at this time, the IMFs sales
won't drive gold prices down. Indeed, the other 203.3 metric tons
should go pretty quickly, and there will almost certainly be left over
demand from the world's central banks. Remember, China itself
previously considered purchasing the entire 403.3 metric tons.
For the big picture on gold, see this.
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Hi George-
The spotlight and link is excellent, I think it would have been worthwhile to mention the price paid for the gold.
A link I found stated they paid $1,045 an ounce. To folks like GG and me, it is fantastic to know that a potential strategic partner like India will purchase gold for $1,045 an ounce. The reason they go through the IMF is to avoid the public market where buying that kind of volume would spike the price of gold. Now everyone should realize that $1,045 is a good support price since a country of 1 billion people must have a few good economists (and both India & China lead in their cultural affinity to gold - jewelery and historic wealth, their civilizations are a bit older than fiat). This gives me comfort to know that the price of gold should not fall much below that. Do you find it interesting that so many central banks are clamoring for more gold, why don't they just buy gold on the open market with their dollar reserves? BECAUSE THERE IS HARDLY ANY GOLD LEFT!!! HAHAHA!!!
The only question I have in the future is if some of the gold transfers will be made with tungsten bars clad in gold with the full knowledge of both parties. This could be done to increase the perception of the standing of the receiving country (India) in the eyes of other countries not in the know, increase the amount of "gold" available (artificial supply to keep a lower price), and in the future provide more price signals of where they want gold to trade.
Cheers GG, in deflation (now) and inflation (much later) gold will shine.
Analysts say one of the reasons why the RBI was buying gold from the IMF was to shore up its gold holdings.
The latest purchase will lift its share of gold holdings from near 4 percent to about 6 percent, much less than most of the developed world but four times China's share.
India's foreign exchange reserves held at the central bank totalled $285.5 billion on Oct. 23, of which gold comprised just over $10 billion. India held 357.8 tonnes of gold reserves as of March 31, 2009, according to the latest data.
India built up its gold reserves to over 20 percent of its foreign reserves in 1994 after a balance of payments crisis in 1991. But the proportion of gold has since fallen significantly as total reserves swelled.
Another reason behind the buying may be India's push for a larger voting share in the IMF.
India, with other emerging economies, has pressed for greater influence in world economic affairs as it has grown rapidly into a $1.2 trillion economy.
India, along with China, has been pressing for a larger representation in the IMF and had promised to augment its resources for lending to developing countries. By buying gold from the IMF, New Delhi may be trying to assert its authority in the global economic stage.
Link http://economictimes.indiatimes.com/quickiearticleshow/5193557.cms
Import of gold in India is down
India, the world's biggest gold market, has imported less gold this year as prices repeatedly made new highs.
Imports by traders between January and Oct. 22 were 157.9 tonnes, down from 383 tonnes bought in the same period a year ago, data from the Bombay Bullion Association showed.
India imports about 800 tonnes of gold every year.
Wasn't Russia wanting to SELL gold recently?
IMF's Golden secret:
www.Broadscape.com
200 tons at $1,046 an ounce. Not exactly a wholesale discount.
Obviously the Indian government (who knows just a thing or 2 about gold) thinks it is cheap right now.
Some gold short must've just read this article... Au just leaped higher. ;-)
By a lot, $20/oz. I wonder if gold is going to close today at a new high?
I pulled my comment because I was wrong about how the IMF was to help developing countries with the sale of gold.
If you mean they stick members of third world countries down in mine shafts and loan them all the food and supplies to mine gold at interest and then take whatever little gold they mine from them for next to nothing if they survive. Then ya that's helping.
Ooops sounds like somebody demanded physical delivery!!
It's the golden rule. He who holds the gold...rules.
Interesting. It seemed to me like holding gold for the central banks was somewhat akin to holding nukes for governments: a sort of non-aggression understand was in place so that the central banks wouldn't try to increase their holdings. One purpose was of course to suppress the price, since as the all-wise larry summers explains, it helps keep interest rates low...another reason was the game theory concept of collusion vs competition in the long run, which is tied to price. Battling for gold might give the CB's short term advantages but in the long run it would bring about "inflation" which the central banks do the best to avoid.
They are buying Gold to counterbalance their soon-to-implode mountains of dollar hoards. He who panics first, panics best.
> He who panics first, panics best.
i like that one :-)
If that last link doesn't work (blog down), click here instead.
Good big picture article, GW. Thanks.