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ShareLast week, in a move that made the international community sit up and take notice, the Reserve Bank of India purchased 200 tonnes of gold from the International Monetary Fund for around $7 billion. Reportedly, this was done to diversify the country's foreign exchange reserves.
Though a $7 billion infusion of gold in a portfolio totalling $285.5 billion, consisting mainly of US treasuries, can hardly be called diversification, it is important nonetheless because central banks and other international investors around the world are aggressively stacking up on gold today. All, essentially because the world is losing trust in the dollar.
With its easy monetary policy, the US, as it were, seems determined to let an already weak dollar become even weaker. And since the world's reserve currency is rapidly deteriorating in value, gold will be a very preferred investment choice till an alternative world currency comes into the picture.
The Middle East countries, China and Russia, amongst others, are buying gold. Several other central banks may also be buying without publicly announcing as much.
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