Countries Stocking Up on Gold

Max Keiser recently said in an interview that China, India and Germany will acquire huge quantities of gold very soon. Just in November, the central bank of India acquired $7 billion in physical gold, while China has been purchasing gold for some time now.

Not long after India acquired the $7 billion in gold, they announced they're in the market to buy up another 203 tons of gold from the IMF.

Keiser added that German contacts from the Bundes Bank confirm they're also in the market for large acquisitions of gold as well, although it isn't clear how much they're thinking of acquiring.

Keiser seems to imply that all of this is in preparation for the eventual disgarding of the U.S. dollar as the global reserve currency. That would mean the countries will be able to use gold as a medium of exchange no matter what the currency the U.S. dollar would be replaced with.

Many countries are looking at the U.S. dollar less as a solid, defensive currency to invest in, and are increasingly considering it a potential liability.

Countries invest in the greenback at this time not because they are looking for stability, but because the continue decline in the value of the U.S. dollar is contributing to loss of exports from the inability to compete from their currencies being strengthened against the dollar.

Keiser concludes that the U.S. dollar is going to suffer greatly in the years ahead, as countries realize it is no longer the place of safety it has been for decades.

As far as this relates to the price of gold going up, investors such as Peter Schiff and Jim Rogers have stated in the past gold could rise as high as $2,000 an ounce to $5,000 an ounce. Others say if the world loses faith the the U.S. currency, it could surge to as high as $15,000 an ounce.

while the latter is highly unlikely, we really haven't been in this place in history before, and there isn't much we can go to to see how things could fare in the midst of the global recession. It is all but certain that gold isn't close to running its upward course in price per ounce.