Wednesday, April 24, 2019

India's appetite for Gold and Silver

India's bullion imports over the last 10 years have totalled a phenomenal value worth $100 billion.

India-goldThe chart on the right shows how gold and silver imports into the country have evolved over the last nine years. In the last five financial years alone, gold import value aggregated $69 billion and silver import $4.5 billion.

India's_import_of_Gold_and_SilverEarly November 2009, the Reserve Bank of India purchased 200 tonnes of gold from IMF for a $US6.7 billion. It was under IMF's limited gold sales programme covering 403 tonnes.

The purchase, undertaken as part of RBI's reserves management operations, was an official sector off-market operation and was executed over a two-week period during October 19-30, 2009 at market based prices.

As a result of this purchase, RBI's gold holdings have increased to 557.7 tonnes which is about 6.1 per cent of total foreign exchange reserves.

In February 2010, IMF announced that it was going to sell the remaining 191 tonnes of gold as part of its 403 tonnes of approved gold sales programme. It is also likely that India is eager to buy the remaining portion of IMF gold for two reasons.

Firstly, India’s RBI has been taking a series of measures to increase its gold holdings in the foreign exchange reserves.

Secondly, the turbulence of the US dollar and the Euro makes it crucial for India to buy IMF gold now,” said Shyamal Mehta, bullion analyst with Commodity Online Research.

India is now the tenth largest official gold holding country in the world, according to the World Gold Council.">