India prefers gold; Warren Buffett chooses coal. The two commodities — one in glittering ascendancy, the other plumbing the depths — are almost metaphors for diverging views on America, the dollar and global economic recovery.

Asia’s big central banks have begun to swap their dollar reserves for lumps of useless yellow metal. Last month India bought 200 tonnes of gold from the International Monetary Fund, almost half of the 403 tonnes earmarked for sale by the IMF. The gold fraternity had expected most of it to be snapped up by the Central Bank of China.

Instead, India made its move, paying $6.7 billion (£4 billion) for the hoard and following the Chinese example. China has almost doubled its gold reserves in recent years to more than 1,000 tonnes. Slowly but surely, the emerging market giants are sterilising a small percentage of their dollar reserves in the world’s oldest store of value.

The Indian Finance Minister rejected any suggestion that the country had lost confidence in the US currency. Most of India’s $285 billion in reserves is held in US Treasury bills. He said that the operation was just a bit of foreign exchange asset management.

But there is more to this than housekeeping: India bought gold, not euros or Swiss francs. We know that China, Russia and the Gulf petrostates have been grumbling about the falling dollar. Within finance ministries, officials are flying ideological kites about the possibility of alternative reserve currencies to the greenback.

At the same time, hedge funds are punting on the yellow metal in a huge speculative carry trade. Using low US interest rates, they are betting on commodities priced in dollars, such as oil and copper as well as gold. The assault on the dollar continues: gold hit a new high of $1,095 per ounce yesterday as the greenback lost ground against the euro.

None of this impresses Warren Buffett, who this week made the biggest bet of his career. Berkshire Hathaway, his investment company, agreed to pay $34 billion to take control of a railroad company.

Burlington Northern Santa Fe (BNSF) is classic Buffett — a low-tech nuts-and-bolts business, hauling heavy goods across the US West. This is the stuff of American legend: rail cars chugging across the prairies to the Big Rock Candy Mountain. The tycoon investor likes bread-and-butter businesses that make stuff and do useful things, companies such as Coca-Cola, Kraft and Geico, a motor insurer. He famously dismissed derivatives as weapons of mass destruction. This week he described BNSF as a two-pronged bet: America needs an efficient and well-maintained rail system, he said, while at the same time America must prosper if rail is to do well. It was an “all-in wager” on the future of the US, he added.

You can almost hear the banjos twanging as Mr Buffett tells his tale of big diesel locos and hoppers loaded with grain. There is no doubt that the Berkshire boss has made a huge bet on economic recovery — more demand leads to more goods, which equals more traffic on the rails. This is a business highly geared to revival. The tracks and the trains are a fixed and sunk cost — fill the freight cars with more goods and the profits soar. In the last quarter, BNSF’s revenues were down 27 per cent to $3.5 billion but operating profit was almost $1 billion.

The question is where Mr Buffett sees the big boost to revenue, and the answer in the short to medium term is likely to be coal. BNSF moves enough coal to power one in ten US homes. Its rails link the huge Powder River Basin reserves in Wyoming to big utility companies in Texas and California. In the first nine months of this year, half its tonnage was shipments of coal.

BNSF’s shipments of consumer goods collapsed in the third quarter by almost a third, but coal held up well, falling by only 13 per cent. All the talk this week was about intermodal transport, about how Mr Buffett was making a green bet on the transfer of trade from road to rail and the reduction in consumption of diesel fuel — of goods arriving from China at ports in southern California and switching to BNSF rail cars for their onward journey.

It is all good publicity, Berkshire will look a bit greener and BNSF may benefit from federal grants to improve rail networks. But Mr Buffett is not known for his flights of fancy. He knows that when America is ready to move again, it will first need more power, and that means coal. When the wheels turn in factories, electricity demand will rise and the rail cars from Wyoming will fill. The fancy goods from China are just the icing on the cake.

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