On this Dhanteras, which marks the beginning of Diwali festivities with people buying gold and silver, the Reserve Bank of India (RBI) revealed that it has shifted another 102 tonnes of gold from the Bank of England’s vaults in London to secure locations within India.
This comes months after the RBI on May 31 this year, for the first time since early 1991, flew over 100 tonnes of gold from the UK to its vaults in India.
Just like the last time, the RBI and the Indian government undertook a secret mission involving special aircraft and detailed security arrangements to move the gold, taking all cautious measures to ensure that the information is not leaked out.
According to a report by The Times of India (ToI), authorities have indicated further movement of gold from the UK to India, however, stating that significant shipments are unlikely this year .
Why RBI shifted gold from UK to its vaults
Since September 2022, 214 tonnes of gold have moved into India as the RBI and the Indian government sought to secure their holdings amid heightened geopolitical tensions across the globe.
According to a report by ToI many in the Indian government are of the opinion that amid the increasing geopolitical tensions across the world, it’s safer to hold gold at home.
Gold is widely considered to be a safe haven asset as it holds its value even during economic downturns. The precious yellow metal is universally recognised and cannot be devalued through overprinting like currency notes. Gold also serves as an effective hedge against inflation, and compared to stocks and other securities, the price of the metal is generally less volatile, making it a reliable choice.
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RBI flew 100 tons of gold from UK to India and more may be on its way
How much gold India has now?
As per the latest report on management of foreign exchange reserves, at the end of September, of the 855 tonnes of yellow metal held by RBI, 510.5 tonnes was held domestically.
How much of India’s gold is in safe custody of Bank of England
Currently, 324 tonnes of gold are held in the safe custody of the Bank of England and the Bank for International Settlements, which also keeps the bulk of the precious metal in the UK.
Slightly over 20 tonnes of RBI’s holdings have been kept in gold deposits.
Why RBI deposits gold in Bank of England
The Bank of England has traditionally been the storehouse for most number of central banks. For India it is no different as some stocks of the country’s yellow metal are lying in London from pre-Independence days.
Shifting gold to its own vault will help RBI save storage costs that it pays to the Bank of England.
With inputs from agencies.
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