The Reserve Bank of India’s purchase of 200 metric tons of gold from the International Monetary Fund, announced on November 3, is a game changer for gold and investors.

It clearly signals that major sellers of gold over the last 20 years—the world’s central banks—have become buyers again. That switch introduces a new set of buyers that are capable of soaking up a significant portion of the world’s annual gold production. And it makes me recalibrate my end-of-2010 target for gold from $1150 an ounce to $1350. (For more on this, see this recent post.)

At $1150 an ounce, it was too late to buy into the gold play with gold already trading near $1100. At $1350 an ounce there’s still time—especially if you make your play by buying shares of a gold miner that’s showing expanding production.

So with this post, I’m adding Goldcorp (NYSE: GG) to Jubak’s Picks with a target price of $48 a share by October 2010.

Goldcorp reported third quarter earnings after the market close on November 4. The short-term news was that the company beat Wall Street earnings estimates by three cents a share and revenue projections by $77 million.

In the long term, however, the more important news was, first, that the company increased its estimate of gold production for 2009 to 2.4 million ounces from 2.3 million ounces, and, second, that total cash costs for producing an ounce of gold would be $300 an ounce in 2009 rather than the $365 an ounce estimated earlier.

This is a great example of the kind of leverage investors get from gold mining stocks over owning gold itself. The company is increasing profits by producing more gold and by earning a higher spread on each ounce because of falling costs.

Add this to the general argument in favor of rising gold prices and you’ve got a solid reason to buy Goldcorp.

Gold prices have been climbing as the value of the US dollar has been falling. Anyone who wants to hedge against a decline in the world’s reserve currency has been buying gold, and that has sent the price upwards.

To those buyers you can now add the world’s central banks.

For the last 20 years, the world’s central banks had been sellers. In 1989, the global average for the percentage of currency reserves held in gold peaked at 32.7%. It’s been all downhill since then with central banks year by year selling gold. By the end of 2008, just 10.3% of the world’s reserves were in gold.

That trend has now gone into reverse, the buy by the Reserve Bank of India signaled. And central banks, especially developing economy central banks, have a lot of catching up to do.

China has been quietly buying gold for years, doubling its holdings over the last six years. But the country still holds only 2% of its reserves in gold.

Even after India’s big buy, that country has just 6.2% of reserves in gold.

Contrast that not just to the 32.7% peak in 1989 or to the 10.3% global average at the end of 2008, but to the 60% average in Europe or the 77% of reserves that the US holds in gold.

The Reserve Bank of India had 20% of its reserves in gold fifteen years ago. Before this recent buy, reserve levels had tumbled to just 3.2% in gold.

A buy the size of India’s is certainly big enough to change the supply/demand side of the global gold market. Its purchase of 200 metric tons of gold is equal to about 8% of the total annual output from the world’s gold mines.

Full disclosure: I will buy shares of Goldcorp for my personal portfolio three days after this is posted.