Sri Lanka central bank in 5-year investment horizon for gold

Dec 07, 2009 (LBO) – Sri Lanka is looking at a 5-year horizon for its reserve investments in gold, Central Bank governor Nivard Cabraal said as gold hit historic highs against the dollar amid unprecedented US money printing. Gold hit 1,200 against the Federal Reserve unit amid unprecedented loose monetary policy pursued by the Fed.

There is a strong likelihood that gold price will fall when the Fed raises interest rates.

Longer Term

“We are looking at a more long-term anchor, a 5-year investment horizon for gold,” Cabraal said.

“You will see plenty of comfort.”

Cabraal says there are strong underlying reasons for gold prices to remain strong including demand from India and China.

Sri Lanka bought 10 tonnes of gold from the International Monetary Fund last month and India’s reserve bank around 200 tonnes.

Sri Lanka’s central bank has at least 15 tonnes of gold, though the latest volumes have not yet been disclosed.

Central banks are buying gold after the absence of about 20 years. As late as five decades ago central banks were the largest holders of gold in the world at a time when money was – at least partially – backed by gold.

From around the 18th century, Sterling to