Good news for India, Good news for Gold Bugs

Today it was announced that the Indian Central Bank purchased 200 tonnes of IMF gold for about $6.7 Billion between the dates of Oct 19 and Oct 30th, at market prices. This is a great piece of bullish news for the metals community

Why good news for India?

This is good for India because it shows they are serious about rebalancing their reserves away from crap like U.S. dollars. Its good news for India in that they got in to get their share before China gobbled it all up. Having one country monopolize gold ownership is exactly the model that the U.S. used to abuse the world with its reserve currency. If we are to ever achieve sound money again many countries need to hold large amounts of bullion to back their currency with, If only Canada had enough sense and balls to step up and buy the other half of the 403.3 tonnes the IMF is authorized to sell

Why should gold bugs care?

This sale gives a big psychological boost to the market as it not only validates the current price as a fair one but it also shows that the Indian Central Bank thinks it can appreciate further from this point. The sale was direct to a CB showing that the IMF was more interested in getting top dollar for their assets than attempting to flood the market and discredit the current price; this could have been disastrous for the spot price if it was simply dumped on the market.

We should be happy that China did not get first dibs on the gold and take it all. Disbursement rather than consolidation is good for the market. We also have the added satisfaction that the IMF has that much less bullion to manipulate the market with later.

All in all this is a good thing for the market! Gold jumped over $20 today on the news, and that it great grabbed a languishing silver by the short hairs and pulled it up too is an additional bonus.