The price of gold continues to rally, primarily from declines in the U.S. Dollar. It was announced recently that the Central Bank of India bought 200 metric tons of gold. The weight of that much gold has been compared to 44 Asian elephants, 3000 North Georgia deer or 120 Toyota Camry’s. Any way you look at it that is a lot of gold.
More importantly – Why is the Central Bank of India is buying that much gold? One might answer, “It’s the dollar, stupid.” That is, the U.S. Dollar. As the dollar declines, organizations such as the Central Bank of India understand the importance of risk management aided by diversification.
Governments, corporations and individuals are all worried about excessive spending by the United States Congress. Much of the spending is seen as short term stimulus rather than long term investing. Cash for Clunkers is gone. First time homebuyers are being encouraged with tax credits to borrow money with minimal down payments. It seems that the behavior that got this country into the current situation is being encouraged.
The Central Bank of India offers one proactive example of attempting to protect ones portfolio against certain government actions that may be causing the decline of the U.S. Dollar. Atlanta Wealth Consultants has always recommended global diversification and multiple asset classes for long term success with investments. This is what the Central Bank of India is doing, diversifying their portfolio away from the U.S. dollar.
~Peter Miralles, CFP® CIMA® CLU
*This article is provided for informational purposes only and should not be construed as individualized investment advice. Please contact Atlanta Wealth Consultants for more information.
