This is definitely a bullish sign for the gold markets to have such a large public purchase of 200 metric tons at record prices ($1064.00/oz. USD at the time of this writing / India bought at $1045.00). This follows the Chinese Central Bank announcing it has increased their own gold holdings by 454 tons earlier this year as more countries are diversifying their bank reserve holdings. The U.S. dollar has been slowing losing value against other major currencies after the crisis phase of our global economic recession had passed. The sentiment is that the U.S. is going to run multi-trillion dollar deficits for the next decade and consumer demand is not going to return to pre-2007 levels so the risk of currency valuation is increasing and this is driving this diversification trend.
“The most important thing is that people want gold even at these prices,” said Ghee Peh, head of mining research, with UBS AG in Hong Kong. “There’s good support for prices for now” from the IMF’s disposal of bullion, he said.
The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries.
Analysis: The death of the U.S. dollar as the sole reserve currency looks to be a foregone conclusion at this point. If governments are stocking up on the yellow metal then the public better take note and take action or be content to suffer the consequences of unrestrained fiat currencies from real fiscal prudence.