Singh’s Words

On Nov. 2, Anoop Singh, the IMF’s Asia-Pacific region head, told me in Tokyo that the lender was redoubling efforts to help developing nations reduce imbalances and retool economies. A day later, after the gold sale was disclosed, his words made even more sense to me. Expect a busy and pro-active 2010 at the IMF.

Four, central banks are reverting to the past. Almost 100 years ago, John Maynard Keynes chided India for its “ruinous” love of the “barbaric relic.” Perhaps central banks were reading their Keynes over the last two decades, during which anti-gold sentiment pervaded.

The belief that inflation had been defeated made paper currency seem a safe and more practical bet than bars of gold collecting dust. The dollar’s swoon is prompting a bit of revisionist history, putting gold back en vogue. It says much about where the global financial system finds itself.

This gold revival has a clear geographic profile, too. Expect Asian central banks that took the whole “trust-the- Federal-Reserve-to-protect-the-dollar” hype too literally to be especially avid buyers.

If you are looking for the next big industry in Asia, it may just be manufacturing fortified warehouses. Many nations will need a Fort Knox of their own to store all those gold bars as the dollar’s reign falters.