Recent Purchase of 200 Metric Tons of Gold by India

According to the Wall Street Journal, in a follow up to the recent purchase of 200 metric tons of gold by India, foreign central banks may be joining in the gold rush. “The world’s central banks are likely to be net buyers of gold in 2009 after two decades of selling.”

India’s purchase last month of $6.7 billion worth of gold from the IMF was only half of what the IMF was offering, leaving the market wondering who will pick up the other half. India’s purchase was the largest gold purchase by a central bank in 30 years.

India's purchase "highlighted in two ways the ongoing shift of central banks and governments from being net sellers of gold to net buyers, which we believe will likely continue to provide strong fundamental support for gold prices," analysts at Goldman Sachs said in a note to clients on Tuesday.

The average country has 10% of their foreign reserves in gold, China only has 2%. If China were to purchase the other half it is speculated by David Rosenberg, chief economist and strategist with Gluskin Sheff & Associates Inc, that gold would rise to $1,300 per ounce.

If foreign central banks are increasing their gold reserves, don’t you think you should too?

To read the entire article click here.