siva,
there does not seem an end to how high the price of gold will go.
already, the indian government has made a fat profit.
there is only so much more gold deposits in the world. i do not have the figures, but i heard a local radio station in toronto, that it will be only a few years hence, when all the mines will run out.
but the real jeopardy of a government hoarding gold, is that it is getting rid of its u.s. dollars. which means, that it is taking a whack at the value of the u.s. dollar, which is an imaginary value, i think.
i say imaginary, only because, for want of any other currency to negotiate, everything is quoted for international trade in u.s. dollars. we give it a certain respect based on what?
not the way the u.s. manages its economy. the u.s. has been a net importer for about 50 years now. what is offset, is that the perception in the rest of the world, that the u.s. is a safe haven for capital. so people buy property and also keep their savings in u.s. dolalrs.
this is very much the habit in latin america, africa and certain parts of asia. i believe, that it is not so much a practice in india, only because we are so huge and by and large, inward looking.
once upon a time, it was the british pound that was the international currency for quoting any commodity. but after the world war 2, the pound lost its prestige.
now they are talking of a basket of currencies. but that is not going to work, because you cannot put your finger in the SDR (that is the name of the basket).
SDR stands for special drawing rights, and each unit will have proportionately various currencies. but there is no paper SDR and you cannot go to the market and buy your grocery with SDR.
this was tried about 30 years ago, and failed to take off.
we are probably stuck with the u.s. dollar, even if its value goes down to 1 dolla = 1 indian ruppee
they say, that some day the chinese yuan may become the standard. i do not believe this will happen in my lifetime.
![Smile :) :)](https://cdn.jsdelivr.net/joypixels/assets/8.0/png/unicode/64/1f642.png)