Gold! India! Gold!

Yesterday's theory of a "limit up" of $50 a month for gold gained more credibility during Day 2 of November, the price of the yellow metal given a shot in the arm by the announcement from the IMF that they had sold 200 tonnes of gold to the Reserve Bank of India - about half of its entire planned sales that have been talked about for years, but only recently approved.

Commodity Online, which originates in India, provided the following commentary in an effort to explain why India acted first - before China - to grab this metal.

Dubai-based bullion analyst Mark Robison says everyone expected China to buy the IMF gold in the first phase. “It is a surprise that India has jumped in the first place to purchase the IMF gold. India is the largest marketplace for gold in the world. I think by buying IMF gold, India has shown increased interest in diversifying out of US assets as the dollar loses value against other currencies,” Robison told Commodity Online.
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"I strongly welcome this transaction with the Reserve Bank of India," the IMF's managing director, Dominique Strauss-Kahn, said in a statement.

"This transaction is an important step toward achieving the objectives of the IMF's limited gold sales programme, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries"

Yeah, right.

Had Strauss-Kahn known that this sale would make the gold price shoot up $20 an ounce, now looking like it's bent on hitting $1,100, maybe he'd have kept the news to himself.

Central banks around the world that are sooooo anxious to exchange their paper money for dumb old gold bars must make other central banks around the world wonder about the paper money that they hold.

While some economists (mostly in the West) still think of the yellow metal as a "barbarous relic", others (mostly in Asia) certainly do not.

Commodity Online also filed this report about China perhaps being next to belly-up to the IMF gold bar (pun intended).

With India and China emerging as the leading economies to beat recession in the world, Indian central bank’s decision to buy 200 tonnes of International Monetary Fund’s gold at $6.7 billion has added to the country’s power to impact the global market.

And, if Reserve Bank of India bagged the 200 tonnes now speculation is rife over which bank will pick up the remaining 200 tonnes the IMF wants to sell in the market.

The first contender now is China, which has been stockpiling gold for quite sometime now. China is slowly shifting its focus from dollar to gold and it now wants more gold reserves in place of its foreign reserves in dollars.

It wouldn't be surprising to hear that central bankers in China are now fuming at India having beaten them to the punch.

Now, there are only 203.3 tonnes of IMF gold left and the price has just risen by a couple percent - if China does snap up the balance quickly, all parties would be well advised to keep that news to themselves for a while, lest the gold price quickly get out of hand.

Here's an update to yesterday's "limit up" graphic:
We're already about two-thirds of the way there after just two days...