According to the World Gold Council, 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971
Reports are that the Reserve Bank of India (RBI) is mulling significantly raising its gold reserves from the current level of 6.5% of total reserves to 10%. As part of the move, the Indian central bank would also lower its holdings of US Treasuries. One of the reasons being cited is a weak US dollar.
Officials will take a call at the next RBI board meeting in October.
According to World Gold Council data, India has added 22.7 tons of gold to its reserves so far this year. The value of its current gold reserves stands at about $39.785 billion. Former RBI Deputy Governor R Gandhi noted that the RBI’s gold holdings have been inching up over the last five years. He said that in 1991, gold gave real support to the economy and it is an important element of the country’s reserves.
According to American stockbroker Peter Schiff, the US went off the gold standard in 1971, but believes the world is going to go back on it. “The days where the dollar is the reserve currency are numbered and we’re going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future, and central banks that are smart enough to read that writing on the wall are increasing their gold reserves now,” he said in an interview.
Globally too, central banks have been increasing gold holdings over the last few years. According to the World Gold Council, 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.
Through the first half of 2020, central bank net purchases of gold totaled about 233 tons. Several central banks have specifically launched programs to increase gold reserves. Late last year, for instance the National Bank of Serbia began buying gold. Poland added 100 tons of gold to its reserves through the first half of 2019. Around the same time, the Hungarian central bank announced it boosted its gold reserves 10-fold.