India further expands gold reserves

India's central bank added 11.2 tonnes of gold to its reserves in February. This is evident from new figures from the World Gold Council. As a result, the country now has a total of 687.8 tonnes of gold reserves, equivalent to 6.6% of the central bank's total reserves. The central bank has been structurally adding precious metals to its reserves in recent years. Since August 2018, the country has already purchased more than a hundred tonnes to diversify its reserves.

India bought a whopping 200 tonnes of gold from the IMF in 2009. After that, it remained quiet for years, but in recent years the Indian central bank has been active in the gold market again. The graph below shows the increase in gold stocks, both in weight (blue line) and market value (yellow line). Due to the increase in Gold price the total value of the gold reserve has increased considerably over the past twenty years. The country's gold reserves are now worth nearly $40 billion, up from about $4 billion at the turn of the century.

Central banks hold gold as the ultimate reserve, because the precious metal has no counterparty risk. It can also be used to build a new monetary system after a crisis. In recent years, central banks have mainly benefited from the appreciation of the precious metal. Last year the price of gold rose In dollars, it was still up almost 25% as a result of the corona crisis and a flight of assets to safe havens.

India is adding more and more gold to reserves (Source: World Gold Council)

This contribution was made from Geotrendlines