We still can’t get it off the vending machine

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: If any commodity can be said to be larger than life, it is surely gold. Over the last five years, gold has clearly out-performed equities.

Gold made record high at $1,193/ounce on November 25. It has gained 16% this month, the strongest in a decade.

Sri Lanka has bought 10 tonnes of gold from the International Monetary Fund for $375m, confirming a trend of central banks’ gold-buying that reverses two decades of heavy selling. The sale was the third from the IMF to a central bank this month, after India bought 200 tonnes for $6.7bn and Mauritius purchased two tonnes for $71.7m. Traders are betting that other central banks, particularly China or Brazil, and SWFs (sovereign wealth funds) from the oil-rich Middle East countries could buy IMF gold (it still has to sell 190 tonnes out of the 403 tonnes it plans to dispose of). India could also buy again.

The latest batch of US Mint sales figures are out and jumping to the forefront are gold coins— both bullion and collector. American Silver Eagle bullion coins officially recorded their best October ever, reaching 29,39,000 in the month.

Gold has been propelled to its all-time high of $1,193 by gold bugs who believe it will always outshine, especially as the value of paper currencies threatens to plunge and inflation looms. Other investors are not driven by doomsday scenarios but see value in gold relative to other assets, from the supply of money to crude oil and equities.

Yet others merely buy into diversification arguments. If you look at gold in terms of how much money has actually gone into it, compared to how much money is still in other asset classes—consider that back in 1982 or in the depths of the Great Depression in the 1930s, gold accounted for huge amounts of investable wealth, probably about one-fifth by some estimates. But today, you’re looking at less than 5% of investable wealth worldwide being invested in gold. So, gold is still under-owned by retail and institutional investors alike.

Gold has also been one of the beneficiaries of the dollar-carry-trade which amounts to borrowing in low-interest-rate US dollars and investing in hard assets such as gold. The movement in gold prices is inversely correlated to the movement in the US dollar since the dollar-carry trade gathered momentum in March of this year.