Thursday, November 05, 2009

RBI bought 200 tonnes of gold for 6.7 billion USD, averaging at about 1047 USD/t.ounce..
How do we read into this event? Most news articles i read on this subject suggest that this is a trend likely to continue or even exacerbate with more central banks likely to further stock-up on gold. IMF has 200 tonnes more on the block..and Russia, China and India are being seen as the likely contenders to pick this up. But one of the major factors that has led to the gold rally over the last 2 years has been, sustained purchases by China. I mean when u r the fastest growing countryin the world with a mountain of a forex reserve mostly in the currency that you only see depreciating for the next several years, where do u park ur funds? You scramble all over the world buying coal mines, oil wells, precious metals and mineral assets, currencies of other rising-power countries...but then comes a point when u think - when practically every corner of the world trades with me (and hence uses my money - the yuan) why shouldn;t my yuan replace the dollar as the "world's local" currency? This seems to be the new policy emanating from Beijing. Press reports have been doing rounds that this is already happening with some African countries having significant trade with China now settling bilateral transactions in Chinese yuans. With such unsettling times ahead, what asset do you bet on to grow your wealth? Stocks, gold, commodities, crude, chinese yuan, russian rouble? Will continue this in a sequel.