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    India’s bold precious metals strategy is unfolding

    Online Niel Posted on

    Gold hit a new record high of $2,790 an ounce on Thursday as investors appeared unfazed by data that could influence the Federal Reserve’s rate cut path this year. The precious metal’s rally comes amid revelations of significant undisclosed buying in London markets.

    The strategic repatriation of gold shows economic confidence

    In a strategic operation that required extraordinary logistics – “Imagine the logistics again, we’re talking 102 tonnes of metal, a bit like transporting 20 adult elephants thousands of kilometers” – India successfully repatriated 102 metric tons of gold from London to domestic vaults. This latest transfer, announced during the auspicious Danteras festival, marks the second major repatriation this year, following a similar 100-tonne operation in May.

    Historical background and strategic change

    The story of India’s gold holdings dates back to the financial crisis of the 1990s report explain, “When India was facing a financial crisis, it was running out of dollars to import goods, so the then government of India decided to pledge its gold.”

    Today’s landscape couldn’t be more different. “India’s foreign exchange reserves are very healthy now, standing at $688 billion, enough to cover more than 11 months of imports,” the report notes. “RBI is more confident that a repeat of the 1990s looks virtually impossible now.”

    Global market dynamics

    Max Leighton, Head of Commodities Research at Citi, offers insight into the market’s unexpected strength: “Gold and silver have rallied despite a number of things going against them…we’ve had higher interest rates, stronger payrolls , Chinese demand. through July and August they collapsed in terms of imports and yet they went higher.”

    The report shows that “unreported demand consistently consumes approximately one-third of line nine gold mining output,” with central banks and high net worth investors identified as likely undisclosed buyers.

    Dual-Metal Dominance: The Silver Story

    While India’s gold moves grab headlines, its influence on the silver market is equally impressive. Vedant’s Anil Agarwal outlines this drive: “Silver is shining in India… prices have crossed Rs 1 lakh per kg, demand has doubled from last year. The demand for silver is driven not only by its traditional uses, but also by massive industrial demand.”

    Industrial applications are particularly noteworthy, as Agarwal explains: “It is now widely used in solar panels for renewable energy, electric vehicles, advanced healthcare, electronics and many other technologies. This combination of being precious and functional is rare, and the gap between supply and demand is widening.”

    A nation’s golden heritage

    Perhaps most striking is the size of private gold holdings in India. While central banks around the world hold impressive reserves – the US with 8,000 tonnes, Germany with more than 3,000 tonnes – Indian households collectively own 27,000 tonnes of gold. This massive private holding underscores the deep-rooted cultural and economic importance of precious metals in Indian society.

    The RBI’s recent moves signal a broader shift in the global dynamics of gold. With 855 tonnes of gold in reserves and more than half currently held domestically, India’s strategy reflects growing confidence in its economic strength and a cautious approach to geopolitical risks.

    “It’s not just about repatriating gold, it’s about supply.” Sharma notes, pointing out that the RBI bought 32 tonnes of gold from April to September, raising gold’s share of reserves from 8% to over 9%.

    In today’s uncertain global landscape, India’s gold repatriation serves as both a symbol of economic resilience and a reminder of the enduring value of physical ownership of precious metals in an increasingly digital world.

    Source: SD Bullion

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    This article is for informational purposes only. The opinions and analysis herein are those of the author and are not financial advice. The Jerusalem Post (JPost.com) does not endorse or recommend investments based on this information. Investors should consider their financial situation, investment objectives and risk tolerance before making any decisions. Consultation with a qualified financial advisor is recommended. JPost.com is not responsible for investment losses from the use of this information. The information provided is for educational purposes only and should not be considered trading or investment advice.




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