Why are 50% of India's Gold Reserves Abroad?

50% of India's Gold Reserves Abroad

India has 795 tones of gold reserves, of which 437.22 are held abroad.

Where are The Gold Reserves Held?

Indian Gold is held with the Bank of England & the Bank of International Settlements (BIS).

Why are Gold Reserves Held Outside?

These banks provide a sense of security. Holding Gold in different locations helps diversify risk.

India’s Gold in The  Bank of England

The bank is a global gold trading hub. India can buy/sell gold reserves via the London Metal Exchange cheaply.

How are The Reserves Maintained in The Bank of England?

We send them money when we want to add gold to our reserves. They buy on our behalf.

RBI Also Holds Gold in BIS

Located in Switzerland, BIS is a neutral agency without significant US influence.

Being a Neutral Agency Makes BIS Very Safe

They can provide liquidity against the gold reserves relatively quickly in times of crisis.

There is a 0.001% Chance That "Fort  Knox" is Empty

This means the gold might exist only on paper, even though both banks have excellent track records.

Unable to Access The Gold in The Forex Reserve

Plus, if sanctions are placed on us, we may be unable to access this gold, even though it belongs to us.

What Does Sanction Mean?

To sanction means to impose a penalty. In the context of accessing forex reserves, sanctions mean, Freezing assets Prohibiting transactions

What Happened With Russia?

Russia was under sanctions last year, & the gold reserves were held in Russia only.

Could Russia Use Their Forex Reserves? 

They couldn’t use it but could purchase gold on the open market and use it to access high-quality forex currencies.

Should Gold Reserves be Held Abroad?

Holding gold forex reserves has its pros & cons. Given the current geopolitical climate, do you think our gold reserves should be held abroad or brought back?