As to the spurious arguement detailed below that Indian gold is "old" - well all gold is old, actually even atom of gold on the surface of the earth is billions of years old! So the Indian gold cannot be any older than the gold they are swapping it for in the Bank of England. Also as to the purity, well the standard LBMA 400oz bars stored at the BoE aren't 999.9 either. Anyway regardless of their purity they could be sold just as easily. Say the Indian bars are 90% pure well obviously their value is 90% of a 999.9 pure bar - simples!
One wonders who were the financiers behind the recent election of the Modi government to prompt such counter intuitive move.
MUMBAI, July 2 (Reuters) - India's central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold, aiming to improve the management of its reserves.
The Reserve Bank of India said the operation would "standardise the gold available with RBI in India with respect to international standards" and the gold acquired would be delivered to its overseas custodian, the Bank of England.
By holding gold reserves in London, the RBI would gain flexibility to mobilise them if needed to defend the currency. It shipped some of its gold holdings to Britain in 1991 as part of a series of emergency measures to tackle a financial crisis.
Under the leadership of Governor Raghuram Rajan, appointed last year, the RBI has sought to modernise its market operations and improve the management of gold and foreign currency reserves that are worth a total of around $315 billion.
According to the World Gold Council, India holds the 11th-largest gold reserves of 557 tonnes. At current market prices, they would be worth nearly $24 billion. It was not immediately clear how much of that would be swapped.
The Economic Times reported earlier that the RBI had sounded out bankers on a plan to swap some of the old, relatively impure, gold that has been lying in its own vaults since before independence in 1947.