Reserve Bank of India Adds Gold For First Time Since 2009
The Reserve Bank of India (RBI) announced that it had added gold to its reserves for the first time since 2009. In 2009, the RBI purchased 200 tons of gold from the International Monetary Fund. The 2009 purchase more than replaced the 67 tons of gold that India put up as collateral in 1991 during a balance of payments crisis.
The addition of eight tons of gold to reserves brings India’s gold hoard to 565 tons, tied for tenth place with Turkey among world central banks. The announcement of the RBI’s addition of eight tons of gold in 2018 comes at a time when the Indian Rupee is at an all time low.
Tola Gold Bars – The Weight Used to Measure Gold in India
While India’s gold reserves are among the largest of any central bank in the world, they are small in comparison to the amount of gold held by Indian households and temples.
Due to the great demand for gold in India, gold often accounts for 10-20% of overall Indian imports, wreaking havoc with India’s balance of trade. As such, the government of India has tried to curb gold imports by placing a 10% import duty and a 5% goods and services tax of gold.
Other Central Banks Buying Gold in 2018
The Central Bank of the Federation of Russia has led the world the past few years in adding gold to reserves. Russia has added gold to reserves every year since 2006. Russia added a record 224 tons of gold to reserves in 2017 and has added 130 tons of gold in 2018, through July.
After selling 14 and 139 tons of gold in 2015 and 2016, respectively, Turkey added 188 tons in 2017 and has added about 20 tons so far in 2018.
The Central Bank of Kazakhstan has added gold to reserves every month for the past 69 months. Kazakhstan added 40 tons of gold to reserves in 2017 and added over twenty tons through June 2018.
The Kyrgyz Republic has been adding gold to reserves since 2012, adding 0.4, 0.6, 0.3, 0.3 and 0.4 tons in 2012, 2013, 2014, 2015 and 2016, respectively. The Kyrgyz Republic stepped up its gold buying in 2017 adding 2.4 tons and has added 1.6 tons through June 2018.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.