Why is gold trading at record levels? Look to India for the answer

Posted Nov 3rd 2009 6:00PM by Connie Madon
Filed under: Major Movement, International Markets, Deals, Market Matters, Money and Finance Today, Commodities

Here's a shocker: India's central bank just bought 200 tons of gold.

India paid $6.7 billion to the International Monetary Fund for the gold, securing the equivalent of 8% of the world's annual production. India's move is a clear signal that Asia is moving away from the U.S. dollar.

India's finance minister said the reason for the purchase was that the economies of Europe and the US had "collapsed."

India's purchase pushed gold prices to $1,086.10 per ounce. December gold futures are trading at $1084.60 per ounce, up $30.60.

India's finance minister said, "We have money to buy gold. We have enough foreign exchange reserves."

New Delhi's purchase came a few months after China revealed that it had almost doubled its gold purchases. It is believed that China, Saudi Arabia and Middle Eastern sovereign wealth funds have enough money to buy the remainder of the IMF's gold reserves.

What does all of this mean? Simply put, Asia and the Middle East are getting out of dollars and putting their money in gold. They are rapidly losing faith in the economies of Europe and the US. How all of this plays out remains to be seen.

Would you buy gold now?

Tags: asia, currencies, currency reserves, CurrencyReserves, featured, gold, India

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Reader Comments (Page 2 of 2)

11-04-2009 @ 6:15PM

Bill Vaughn said...

I can see by the posts that there are very few who realkly understand gold, or even the current and upcoming circumstances. Those who think gold buyers are "idiots" are, themselves, the idiots. I bought at $240. my entire investment for 100 troy oz was $24,000. I just sold 40 oz and got my ENTIRE investment back with a 100% profit. And I still have 60 oz, and don't care if it goes down for awhile - it's all free now. But it will go up further, because the Saudis and Chinese are not done buying, and the US is facing inflation.

11-04-2009 @ 6:48PM

Paul said...

Watch this and you'll know why gold will reach $3K-$5K/OZ

http://video.google.com/videoplay?docid=6507136891691870450#

11-04-2009 @ 6:54PM

David said...

Earnest: I agree with you, but DONT FORGET TO BUY A GUN AND LOTS OF AMMO!

11-04-2009 @ 6:51PM

mark said...

John B. The economic and political elite always will leave themselves an exit to be used when the crisis comes. We simply must be as smart as they are and locate the exits ahead of time. When the bubble burst, and it will, the IOUs you have in your wallet, bank, ect., will not be able to buy anything. Buy the way, I never took stock in Sarah anyway. Good Luck.

11-04-2009 @ 7:38PM

Mead Carlson said...

Gold is at an all time high because of the weak dollar. Interest rates in the U.S. artificially low to help debtors,but we all pay for higher oil and no interest on savings. The dollar is being forced to be weak.

11-04-2009 @ 8:14PM

setec5354 said...

Capitalism only and only proves it's greed and pure corruptions.
There will be a day that gold silver or any type of riches is no use when all hell breaks loose.
The banks proves 100% how they will greedily rob main street blind to the point of no returns.
The mother of loan sharks of dirt and greed.

11-04-2009 @ 8:15PM

setec5354 said...

The new HUNTS BROTHERS!!!!
This time it is gold and not silver!!!!!!!!

11-09-2009 @ 11:16PM

GoldBaker88 said...

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