For much of 2009, gold traded in the range of low-mid $900 per ounce. There was a dip over the summer, with a strong upswing starting in September. Gold is now trading well over $1,000 per ounce, in fact just under $1,100.

Turns out that the government of India was buying gold in mid-October. Over a two-week span, the central bank of India bought 200 tonnes (metric tons) of gold from the International Monetary Fund (IMF) at an average price of $1,045. The IMF — over which the U.S. holds veto power for most actions — got approval to sell the gold from — where else? — the U.S. Congress, last spring.

Previously, the government of India held 350 tonnes of gold reserves. This 200-tonne purchase is a 57% increase in India’s reserves. There’s joy in India, I’ll bet. (It makes me wonder what the Pakistanis think, now that their large neighbor has both nuclear weapons AND a growing gold hoard.)

To read the rest of the story and learn more about China’s golden ambitions, click here.

On that topic, a friend sent this item along last week…

(Gulf News Nov 12) Riyadh: There has been an unprecedented demand for gold in the Saudi market recently, with over 13 billion Saudi riyals (Dh12.75 billion) being spent on the yellow metal during the last two weeks.Demand is expected to rise still higher as more investors turn to gold as a safe haven in the midst of the global financial crisis, according to market sources.

Sami Al Mohna, an expert on the gold market, said the trend had resulted in a substantial rise in the gold reserves of Saudi investors.

Since soaring to an all-time high of $1,033.39 per ounce in March this year, gold has plummeted 30 per cent.

Gold for December delivery on Monday rose $8.60 to settle at $726.80, roughly the same level at which it traded a year ago.

“Many Saudi investors see this as the right time for making investments in gold as its price is the most reasonable one at present,” said Al Mohna.

Needless to say, the Saudis have a lot of money. Not just a lot… but a really, really, big, stupendous mountain of the stuff.

Oh, and like you and me, they’re human.

Which means they can’t help but glance through the morning’s financial news, adjust the reading glasses, and think, “Blessed Mohammed! This is getting really, really serious. Maybe just a little extra gold under the tent right now wouldn’t be such a horrible idea.”

They aren’t alone. We are getting regular reports that at these prices, demand is soaring in India (where price inflation is now running around 11%), and brisk sales have pretty much wiped out physical supplies of small coins and bars in the U.S. and Europe… among other corners of the world.

On that score, a few days ago, correspondent Jim G. sent along the following…

Most of you are probably aware that there’s a shortage of gold bullion coins at the retail level.What does that mean?

Today I decided to purchase some gold bullion coins. So I called the Northwest Territorial Mint, one of the larger operations in the country or at least the Northwest, so I’ve been told.

I called to see what the availability was. The operator put me through to sales, where I sat for 30 minutes. I finally got in my car and drove 40 minutes there, all the while still on hold. When I finally got there, a woman went in the back to see about bullion coin availability. She was told they were back ordered with 30,000. Not dollars, orders. If I placed an order today, they thought they could fill it in 16 weeks.

To sum, I’m buying… if you know a seller.

While we already know $750 is no magic number below which gold cannot fall or below which it cannot loiter, I take no small comfort in the fact that there is a clear increase in demand at that price. In time, as the dollar continues to participate in the fiat currency race to the bottom, that number will ratchet higher and higher still.

Maybe not overnight, but in the next six months to a year, certainly… or as certain as anyone can be about anything these days.

One thing that could get the show on the road pronto-like has to do with the continuing presence of the other 900-pound gorilla in the room, foreign dollar holders. Like the Saudis, the Chinese have at their fingertips a lot of greenbacks. Actually, not just a lot, but enough to remake the Great Wall.

And they, too, are humans.

And so, over their morning cup of tea, they finger the abacus while watching the daily financial news and say, “Holy Mao! This is getting really, really serious. Maybe just a little extra gold in the rice jar right now wouldn’t be such a horrible idea.”

On that front, here’s some news from Hong Kong…

(The Standard, Hong Kong. Nov 14) — The mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold, a person familiar with the situation told The Standard.Beijing is considering changing its asset allocations during the financial tsunami in order to build up gold reserves “in a big way,” the source said.

China’s fears about the long-term viability of parking most of its reserves in US government bonds were triggered by Treasury Secretary Henry Paulson’s US$700 billion (HK$5.46 trillion) bailout plan, which may make the US budget deficit balloon to well over US$1 trillion this fiscal year.

The US government will fund the bailout by printing new money or issuing huge amounts of new debt, either of which will put severe pressure on the value of the greenback and on government bond yields.

The United States holds 8,133.5 tonnes of gold reserves valued at US$188.23 billion. China holds gold reserves of just 600 tonnes, worth only US$13.89 billion.

Beijing’s reserves could easily go up to 3,000 to 4,000 tonnes, Tanrich Futures senior vice president Colleen Chow Yin-shan said.

In another article from Bloomberg, the head of China’s gold association commented that he thought China could triple its reserves.

And there was this quote from that same article.

China has the world’s biggest foreign-exchange reserves at $1.9 trillion, according to data compiled by Bloomberg. It is also the largest overseas holder of Treasuries after Japan. China’s demand for gold jumped 23 percent in 2007, making it the world’s second-largest consumer.The Asian nation may buy more gold for its reserves on concern the $700 billion U.S. bank bailout will cause declines in the dollar and Treasuries, the Standard newspaper in Hong Kong reported today, citing an unidentified person.

In the final analysis, we can’t say with certainty what path gold will take between now and the time this crisis is over. But until I can see some tangible evidence that it has lost its value as money, I’m a happy holder and, at under $750, a buyer.

Source: Gold in the Low $600s?

Okay, okay, so it has been described as mining’s worst kept secret. Columbia’s President Alvaro Uribe spilt the beans of a major gold find last December. But AngloGold kept mum in spite of widespread media speculation that it was the lucky company.

We knew for sure back in February that it was indeed AngloGold, and that the resource was not only real but significant. One of Isabel’s insiders confirmed that a fair few ounces of the yellow stuff had been struck.

And he wasn’t wrong.

Phew! A significant resource!

According to AngloGold, there is a 12.9m oz glittering gold resource at its wholly owned Columbian project, La Colosa.

And there is still room to increase the resource as drilling to date has only tested a relatively small area.

“Three quality targets require follow-up,” says Anglogold.

So this is only an “inferred” resource, the earliest stage of quantifiable exploration. But it is JORC compliant, so has met Aussie set standards for reporting.

Better still, La Colosa is not Anglogold’s only Columbian project. The Gramelote deposit, discovered in 2006, hosts an inferred resource of 2.12m oz. For now it seems that Gramelote will be put on the backburner.

In fact, the funding and pre-feasibility study of Gramelote will be done by joint venture partner B2Gold. AngloGold has handed over a 51% interest to this Vancouver-based exploration company.

So, quite clearly it believes that La Colosa should take centre stage. After all, it owns a 100% stake in the project, and La Colosa is a much bigger resource! So it is pushing ahead — the plan is to take La Colosa to pre-feasibility by the third quarter of this year.

A frontier worth braving!

AngloGold was the first company to brave Columbia back in 2003, when nobody wanted to touch it.

Columbia is a highly stratified society, with Spanish descendants enjoying much greater wealth than much of local population. Not unlike the British and Dutch in South Africa!

And as in South Africa, crime is a real issue in Columbia. Aside from politically motivated violence, drug-related crime is a major problem — it is the most common cause of death after cancer!

No wonder then that many investors have steered clear! And no wonder AngloGold, with its South African roots, feels at home! It is quite used to operating in challenging environments.

But now AngloGold has some 37,500 sq km of land. The company seems reasonably confident in the current Columbian government, which it says is effective.

It also feels general conditions are good. President Uribe has taken a tough line with both left-wing guerrillas and right-wing paramilitaries. Fair play to him — murders and kidnappings have fallen as a result.

Judging by La Colosa and Gramelote, AngloGold’s foray into Columbia was a risk worth taking. Clearly, it is good news for Columbia too. This could double Columbia’s gold production by 2011!

The safe haven of the big boys

It is this sort of news that reminds us why mining majors are a long-term safe bet. New gold finds are increasingly rare. And investors in these jittery times have become a little jaded. Some are even wondering whether there is, in fact, any gold left underground.

As we’ve mentioned in recent diaries, junior explorers are struggling to raise capital. Understandably, many investors would rather bet on bigger players. They might not yield the massive upside that could be had from junior explorers. But it is possible to get the best of both worlds.

And clearly AngloGold has the experience, and the wisdom that comes with that, to make a project like La Colosa economically viable. Of course we know that this is still very early days— it is going to be six years at least before we see an AngloGold Columbian gold bar.

But even if that never materialises, at least we know Anglo is producing elsewhere. In the first quarter of 2008, output was 1.2m oz, with cash costs of $430 per oz.

The other big news is that AngloGold now has a clear strategy for reducing its hedge book, with plans to raise ZAR11.9bn from shareholders. It is a decision that must still be approved at an extraordinary general meeting next week. Since Aussie chief Mark Cutifani is a firm believer in the outlook for gold, he’ll be doing his best to convince shareholders this is the way forward.

Clearly the market thinks it is a good idea. The share price of what one analyst calls “the cheapest gold stock in the world” rose nearly 10% after the news broke. Cutifani too calls AngloGold “the most undervalued story in the gold industry”.

But perhaps the tide is finally turning.

Keeping mining

Erin and IsabelSource: When AngloGold’s Risk Paid Off