Most countries recognize the fact that the US is abusing the monopoly of dollar. If not for its currency the US's economic position would have been in a free fall since the crisis of 2008. The only hedge against such a catastrophe is buying gold. Now the yellow metal has caught the fancy of investors world over due to its inflation hedging property. Indians in particular have displayed enough inclination towards buying the precious metal. So much so that the government had to impose taxes to reduce gold imports. This, the Indian government believes would help the problem of current account deficit. Probably it is time the Indian policymakers take some lessons from their Russian counterparts with regard to gold buying. Only then will they relieve themselves of their myopic views on gold buying.

As reported by Moneynews, Russia and not China has been the world's biggest gold buyer in the past decade. The Russian central bank has added 570 metric tons of gold in the past decade. This is nearly 25% more than runner-up China! The added gold is in fact almost triple the weight of the Statue of Liberty. Now, despite the purchase, Russia remains the eighth-largest holder of gold as per the World Gold Council. It is still way behind the US, Germany, Washington-based IMF, Italy, France, China and Switzerland. Also gold accounts for 9.5% of Russia's total reserves. As against this, it accounts for more than 70% of reserves in the US, Germany, Italy and France. However, the gold buying binge at least suggests that Russia is betting more on a safer asset than fiat currencies.

India's estimated private gold holding is the largest in the world. However it ranks 11th in the tally of publicly held gold. At just 9.6% of its reserves in gold, we do not think the RBI has enough reasons to shy away from having more exposure to gold.