India buys 200 tons of gold
Move shows little confidence in the dollar
Posted by 247 wallst on Tuesday, November 3, 2009 12:17 PM
The dollar is still losing its luster as the foreign reserve currency of choice.
India has bought 200 tons of gold from the International Monetary Fund at $1,045 an ounce, which is close to a recent record high of $1,070. The entire transaction is worth almost $7 billion.
The move is seen as a way for India’s central bank to move some of its capital away from investments in the dollar.
The IMF may sell another 200 tons of gold in the relatively near future and most experts expect that the buyer will be China, which has foreign currency reserves of $2 trillion and might like to have its own hedge against the value of the American buck.
India is being explicit in its concern about the long-term value of the dollar. One senior official of the central bank there told The Wall Street Journal, “It makes sense to buy gold as it will appreciate more than the U.S. dollar.”
The equity markets may stay volatile as the global economic recovery stays uncertain, giving central banks and investors another reason to move to gold as a “safe haven”.
The transition to the commodity may drive down the dollar’s value even further, which could help U.S. exporters, but that is bound to increase the concern that the dollar is no longer the most important exchange currency.
Top Stocks writer Douglas A. McIntyre is an editor at 24/7 Wall St.
http://articles.moneycentral.msn.com/Investing/top-stocks/blog.aspx?post=1351070&_blg=1,1351070**************************************
Gold Hits a Record on India's Big Buy
Purchase From IMF Keeps 200 Metric Tons Off the Market; China Buying, Too?
BY ALLEN SYKORA AND CAROLYN CUI
Gold surged to a new record Tuesday as India's decision to buy 200 metric tons of the precious metal from the International Monetary Fund fueled optimism that demand will remain robust.
The Reserve Bank of India, the country's central bank, bought the gold last month, taking half the amount the IMF is seeking to sell.
The Indian purchase came as a surprise to the market, even though the IMF had previously announced its plans to sell 403.3 metric tons of gold. The decision by India helped provide a surprise support for gold prices at a time when investors were beginning ...
http://online.wsj.com/article/SB125726030963125397.html ***************************
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