Ability hits the mark where presumption overshoots and diffidence falls short. John Henry Newman Central bankers have been on a massive Gold Buying Spree led by Russia and China.
One must remember that not only Putin is ex-KGB officer, but he is also an economist and holds a black belt in judo. Judo teaches you to use your opponent’s momentum to defeat him or her, and that appears to be what Putin is doing. He has this administration running circles, by the time they figure out what he is up to, it is too late to do anything. Putin and China can see that the writing is on the wall that the days of US holding the top spot are numbered.
Our economy is in shambles and only appears to look strong because of the hot money that is holding it up. Regarding illusions, it is a perfect illusion and for now, the masses have bought it, but Russia and China have not.
Putin is also aware that the average life span of a super power is 250 years, and the US has been in this position for 240 years, so it is running out of time. Hence, he is using the strong dollar to buy up cheap, valuable Gold.
IMF data (International Monetary Fund) shows that the Russia and China have been among the biggest net buyers of Gold for eight years in a row. Last year countries purchases close to 590 tons of Gold accounting for 14% of annual global gold bullion demand. Smart nations like Russia and China are using these low prices to load up on Gold and divest from the dollar. They understand that this economic illusion can last for only so long before reality strikes.
The chart below illustrates how Russia’s reserves of Gold have soared over the years. Putin is planning for a day when the US is not the dominant power anymore. When the dollar is finally dethroned, the end will not be pretty.
The number of bilateral deals bypassing the dollar continues to soar. The opening of the AIIB (Asian Infrastructure Investment Bank) and with the Yuan being accepted into the world reserve currency club, the path for the dollar is definitely downhill. Game Plan Both China and Russia make for great long-term investments. In Russia YNDX and VIP are examples of two good companies investors can open positions in; in China, we have BABA, CHL, HNP, etc. Most importantly, it would be prudent to hold a position in Gold bullion.
You can use declines to open new positions. We would not aggressively jump into Gold bullion unless you have a lot of extra cash lying around that is not being used. Gold is still not fully out of the woods yet as the trend has not turned positive yet. It has a solid wall of resistance to overcome at $1350.
Sadly that is the current path the US has opted for; perhaps the next administration will be wiser. None are more haughty than a common place person raised to power. French Proverb This article is provided courtesy of www.tacticalinvestor.com