By David Lew Bullion and precious metals lovers and investors will remember and relish 2009 for all the good and bad things that made gold the hottest darling of investing public, traders, market manipulators and speculators across the world. Good things that they would relish: gold prices hit a record of $1227 per ounce; gold rush is on by mining countries across the world and nations are scrambling to amass gold reserves. Bad things that they pray that should happen in 2010: further collapse of the US dollar, wild stock market fluctuations and crashes that make gold a safe haven asset, and real estate bottoming down so that people rush to buy gold and silver as family assets! Having said this, one particular characteristic that stands out in 2009 as far as gold market is concerned was the rush by almost every nation and every Central Bank to build up gold reserves. Central Banks have been chalking out plans to buy gold from open market, mining firms and the International Monetary Fund (IMF) to mop up the yellow metal reserves so that their foreign exchange reserves are stacked with gold in place of the weakening US dollar and uninspiring bonds. The United States is the undisputed leader in gold reserves in the world with 8139 tonnes of gold under its custody. China made news on gold in 2009 when it declared that the dragon country will build at least 10,000 tonnes of gold reserves in the next 10 years. China is currently the fifth biggest holder of gold reserves with 1054 tonnes. Then, India—the largest consumer and importer of the precious yellow metal—made the biggest news on gold in November when its central bank, the Reserve Bank of India (RBI), bought 200 tonnes of gold from IMF for a high price of $1045 per ounce. This singular action from India took the gold market to an unprecedented bull run, taking the yellow metal prices to a historic high of $1227 per ounce in November. Gold prices have since then come down, but the golden ripple effect that India’s IMF gold buy still reverberates across the bullion markets in the world. The point I am trying to argue is that nations are in a rush to buy and own more and more gold. Gold supplies from mines are declining. I read recently that the cost of producing per ounce of gold is around $600. With decreasing output and increasing demand for the precious metal, it is quite natural that gold prices are set for a big boom in the coming years. 2009 was just the beginning. And as global commodities investor Jim Rogers says gold prices may be headed for $2,000 or more per ounce in the next one decade. As central banks scramble to stack up more gold reserves, it would be worthwhile to study how much gold is there in the global market.

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