Why the Reserve Bank continues to increase its reserves of the precious metal.

The Reserve Bank of India continues to set records for gold purchases. In January and February, it purchased a total of almost 13 and a half tons of the precious metal. And in April of this year, the Reserve Bank purchased 5 tons of gold — one of the highest figures in the world for the given time period. Over the entire last year, however, India purchased only about 16 tons of the precious metal.

Now, according to the World Gold Council, the country’s gold reserves amount to more than 26 million troy ounces.

What is the reason for this? The answer to this question is quite simple. The precious metal has always been considered one of the most reliable ways to protect a country’s savings.

Why is India buying gold?

There are two main reasons for this. The first goal of the Indian government is to diversify the public savings structure. The second is to create a “safety cushion” in case of possible crises.

Indian economists believe that buying gold is a smart strategy on the part of the Reserve Bank in the face of geopolitical instability. Confidence in fiat currencies continues to decline, while the role of gold as a reliable asset, on the contrary, is growing.

Interesting fact: India is currently one of the three largest consumers of gold in the world, but produces almost no gold itself.

Today India is an actively developing state. And gold, as an important element of culture, turns into the main way of preserving savings. The precious metal always increases in price over the long term, which is not the case with traditional currencies or securities.

The unique properties of gold as an asset make it a profitable investment not only for the state, but also for its citizens. The precious metal serves as an excellent protection against inflation. It is therefore not surprising that demand for gold among the citizens of India increased by 8 percent between January and March.

Growing demand indicates that the residents of India are choosing the precious metal to protect their financial savings from economic shocks. However, it is important to remember that investment gold is better suited for these purposes, rather than, say, jewellery. Why is that? Read in the article:

What is better to buy: gold bar or jewellery?