In another sign of the ascendancy of India as a major global player, the country absorbed more than half the IMF gold recently on offer, causing the price of gold to rise $4 an ounce to a near-record yesterday. The purchase totaled 200 metric tons of gold, cost $6.8 billion, and increased India's gold reserves by 50% in a single transaction.
The sale took place over two weeks from October 19-30, and India paid an average of $1,045 an ounce. The sale of 403.3 tons of gold was intended to increase the IMF's liquidity and has been in the works for more than a year. That India would be the largest buyer, taking roughly half the total offering, came as a surprise to the market and cleared away what was considered a looming liquidation of gold that was keeping prices down.
"Central banks in India and China will be happy to accumulate gold at these levels. I will not be surprised to see even some Southeast Asian banks buying gold," Aaron Smith, Asia head of the $1.65 billion technical trading fund Superfund, told Reuters.
Gold has risen recently in response to weakness in the U.S. dollar, but gold rose yesterday even as the dollar firmed up against other currencies. Clearly the demand is there, as more countries make an effort to diversify out of greenbacks.
Maybe $2,000 an ounce isn't far fetched after all...
Jai Hind
Gold extends gains on Wednesday morning - new record high as India's finance minister comments on the collapse of Europe and North America:
http://www.ft.com/cms/s/0/0eaa4a80-c856-11de-a69e-00144feabdc0.html
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As long as you're on the right side of the trade, you'll make money. You can't save the country. Might as well make a little dough while she goes tits up.
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