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    Smart Move: Russia Buys Gold and Wins

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    Will Gold Beat Dollar for Number One? (11)
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    Russia is increasing its gold reserves. Ingo Narat of Germany's most-read business weekly Handelsblatt thinks this is a smart move since the US, Japan and Europe will soon see a rise in inflation.

    "Judging from the data [released by the World Gold Council], no other country has recently bought gold as resolutely as Russia. Since the beginning of 2014, Putin ordered the purchase of nothing less than 283 tons of the precious metal," the expert noted.

    This amount is currently valued at $11 billion but it will increase since international investors maintain that the price of gold is too low, he added, citing a survey conducted by Merrill Lynch. 

    Narat believes that gold is a beneficiary asset at a time when Washington, Tokyo and European capitals will opt for reflation, a set of measures aimed at stimulating the economy to recover the healthy price level.

    Michael Hartnett, a chief investment strategist at Merrill Lynch, recently echoed this sentiment. He noted that federal spending in the US, Japan and Europe was likely to exceed state income next year. If this happens, inflation rates will rise and the price of gold will likely explode higher.

    In addition, the Federal Reserve will probably not raise interest rates this year, which affects the US dollar. "Gold is often viewed as an alternative to the dollar. The gold price is going up, when the US currency is weak. This is what we are seeing now," Narat observed.

    Even stock markets, plagued by volatility, are increasingly viewing gold as a source of stability, he added.

    "Putin is likely to have made the right call," Narat concluded.

    Topic:
    Will Gold Beat Dollar for Number One? (11)

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    Tags:
    reflation, gold reserves, gold, inflation, Europe, Japan, United States, Russia
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