Being facetiously proud back-linked members of the Russian propaganda propornot echo chamber.
We by indictment, are required to fill your screens with further ‘fake news’ as to why Russia keeps buying physical gold bullion month in month, out.
First, official Russian Gold Bullion buying since 1994, and secondly the fiat Russian ruble vs gold values over the same timeframe.
Below Dimitri discusses differences between heavy Chinese and Russian gold bullion buying over the past decade.
Highlights of Dimitri’s though include:
“There is a difference between Russia and China,” the analyst explained. “In China, gold is purchased first and foremost by private individuals and companies. The Central Bank also buys gold, but its share relative to China’s total reserves is rather small.”
Never mind the Chinese are likely completely underreporting China Official Gold holdings at the moment.
Or that physical gold bullion flows to her land, have dwarfed the silver and gold price discovery dominating COMEX for a decade or so.
Let’s see more from Dimitri…
“In Russia, by contrast, the Central Bank’s share of total gold purchases is high. Furthermore, Russia has been dumping its dollar assets, especially over the last few months. Both countries, but Russia especially, have solid reasons for dropping dollars in exchange for gold, the analyst stressed.”
“Of course, part of the issue is that currency can become worthless as a result of inflation. This is also a kind of political declaration, stating that countries which have too many dollars can become the object of political blackmail. Russia is in a situation where it faces political sanctions from the US specifically and the West in general, and therefore has good reason to play it safe and bet on gold. Unlike currencies, precious metals cannot be declared ‘worthless’.”
According to Speck, China’s policy in relation to gold is more difficult to rationalize. Beijing, which has about 1,800 tons of gold, has another problem – “too many dollars.”
“China has pumped itself full of dollars, while having relatively little gold. Therefore, it risks becoming the object of blackmail. Many fear that China could dump a huge amount of its dollars on the market in the current trade war with Washington,” Speck noted. “However, this is unlikely, because the US can simply say that ‘these securities are temporarily or permanently depreciated. Then the problem will arise where the creditor (China) becomes dependent on the debtor (the US),” he added.
Dollar’s Artificially Inflated Value and America’s Deindustrialization
According to Speck, Washington’s policy since the 1960s has been to replace central banks’ gold-based reserves with US securities. However, this policy has also hurt the US itself, facilitating America’s deindustrialization. “In the world, there is no other country which has experienced a trade deficit for over 50 years,” the trader noted. “This ongoing trade deficit has led to an excessive growth in the value of the dollar,” he added. This, in turn, has led to America’s deindustrialization and a long-running industrial downturn.
“This is one of the problems Donald Trump is trying to tackle at the moment, even though he completely wrongly simply shifts the blame on the US’s trade partners. This, of course, is stupid,” Speck said.
According to the latest estimates, Russia and China are in 5th and 6th place in total gold holdings, respectively. The US is estimated to have over 8,100 tons of gold (although some US politicians have questioned whether Fort Knox and the New York Fed really have the amounts of gold officially declared). Germany, which recently repatriated its gold from the US, is in second place, with 3,371 tons; Italy is in third with 2,452 tons, and France in fourth with 2,436 tons. Moscow’s historical record in total gold reserves was reached in 1941, when the USSR stockpiled some 2,800 tons of gold just before the start of the Second World War.
Not just Ron Paul, but also then Candidate (and now President) Trump has previously thrown shade on whether we in the USA indeed have the Official Gold Reserves we claim to have.
See for yourself…
At 17:40 source -> https://t.co/5np85AUkLj
— James Henry Anderson (@jameshenryand) March 22, 2016
No matter though.
If you recall, US Treasury secretary Steve Mnuchin with his bauble loving wife, jetted by Fort Knox about a year ago to do a ‘gold audit’: “Glad gold is safe!”
For those paying attention, aggressive sovereign Russian gold bullion buying really got underway following their then 2004 Deputy Chairman of the Central Bank of Russia’s findings of GATA. Likely learning the financial market implications of that organization’s thesis.
Some highlights below can quickly bring you up to speed.
By the way please, mute the sound in the second half of the video clip, if classic 1990s gangster rap is not your thing.
21st Century #Russia CB Gold Policy
— James Henry Anderson (@jameshenryand) January 6, 2018
Of course we many supposed gold and silver bugs often get mocked by debt and paper bugs, for supposedly cheering autocratic regimes like Russia and China for their continued gold bullion buying sprees.
Same debt-paper-people, are likely 99% clueless on their fundamental financial history.
For instance, in the USA from 1934 to 1974, we freedom loving US citizens were not allowed to own more than 5 ounces of gold bullion each.
By the time it was ‘re-legalized’ the #Au
price was $185 oz (start of 1975)
Russian citizens r still screwed
by their ‘laws’ in terms of
private tangible wealth
— James Henry Anderson (@jameshenryand) January 6, 2018
Much of our former US circulating, then 1934 confiscated gold coin supply, was eventually shipped off to Europe after WW2.
Almost half of US Official Gold Reserves were lost to exploding US trade deficits and our contributed failing to rig the gold price through the London Gold Pool during the 1960s.
Unfortunately in Russia today, private gold bullion ownership by its citizenry still likely has limited players, 18% Value Added Taxes, limits on private trading, and import export options (source).
Russia is continued a disgrace, when it comes to private property and first amendment rights.
China today, not much different either in those respects. I am not an optimist when it comes to either nation building laws respecting nor protecting sovereign individual rights ahead.
Xi Jinping and Vladimir Putin will continue to try and rule to their deaths. Or at least until their potential political comeuppances one day.
Meantime, everyone free can still bet on and prudently allocate some wealth to bullion long term.
About the Author
James Anderson has a BA in finance from Loyola University New Orleans. He has both worked and invested in the physical investment grade bullion markets prior to the 2008 global financial crisis.