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Will gold reach 20000/-per sovereign? This is the question of the day. We have heard of news that the Reserve Bank of India has purchased 200 tonnes of gold from International Monetary Fund for $6.7 billion. It was said as a part of maintaining its foreign exchange reserve. But the gold prices are already high and no impact is at present seen. I truly wonder the psychological price level of common man will increase in Indian market for gold. India is one of the largest consumer of gold. Most will agree that gold reserve in the world is coming down. Of course, the mining is also an expensive process. So you can calculate things from now on. As I was an economic student I can correctly say that when the resource is scarce, demand is high and the supply is low, the price will rise. The mining companies are highly dependant upon banks. There was a trend to lock the output price by a process called ‘hedging’ where the mining companies sell in advance a part of their output for a fixed price. But as soon as they realise that there will be a rise in price they will buy back the advance contracts. What will India do with the gold? Will it hedge against the falling dollar?