I mentioned the other day about the Central Bankers Buying Gold and setting a new record doing so. I think its kind of a big deal and a little bit ominous as to what might be in store for the future, so today I wanted to have a bit of a look deeper to see WHO is buying all that gold...and can we speculate a bit more about WHY?
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I came across this cool graphic which shows the Total Gold Reserves Change over the last 10 years. Yes, 10 years is quite a long period and that includes years from before Covid and the recent inflationary problems we've been facing world-wide. However I think it shows a macro trend that is becoming very obvious.
It’s clear that Russia and China are leading the charge into Gold. This is also just the officially reported Gold Reserves and many pundits claim that China has been hiding some of its gold acquisitions so their number might be even higher. So what do Russia and China have in common with each other and might that explain why they are buying so much gold?
Well, yes. Russia and China are building a strategic alliance and both are key players in the BRICS which has been talking about launching it’s own Gold Backed Currency in recent years. Perhaps more importantly though, these two countries have had deteriorating relations with the USA which controls the US Dollar – The Reserve Currency of the World.
Both Russia and China are clearly moving AWAY from the US Dollar and Gold is the obvious choice for them to acquire as a reserve asset. Is this trend likely to continue? Personally I think this trend is really just getting started. We have an increasingly irresponsible US Monetary Policy and a belligerent US Foreign Policy toward these countries over recent years and there is little indication that the situation is going to improve. Pragmatic countries are taking precautions and diversifying into other Safe Haven Assets like Gold to protect themselves financially.
Don't think for a second that Russia and China have a alliance, o that they have the same goals. The Xi and Putin friendship is just as much worth as the Hitler / Stalin pact was in 1940. China is just waiting for the right moment to profit from this mess the Russians are in now. They want their peice of Siberia back that the Russians took, and wont mind if its a bit more than that. All they need is the right reason to step into action. And the Russians wont be able to do anything about it. They can't even handle Ukraine, let alone the chinese army.
The last time I read about the chinese gold production, it was rated at 4,400t yearly. And they dont sell anything of that. So it can be assumed that they have by far the biggest gold reserve of all countries - may be even 40,000t or more.
Russia is showing some restraint in Ukraine because it doesn't want NATO getting involved.
I think that Russia and China have a common enemy at the moment and that gives them a common interest.
Russia is showing restraint in Ukraine because they are a bunch of drunk, corrupt losers. They are basically still operating with the old soviet methods. Remember, Putin has grown up with that system and made his career in the KGB. Thats what he knows best, and what he wants to continue. But Russia basically sucks in all aspects. The only thing they have working for them are the natural rescources, like oil, gas, ore and so on.
The Chinese on the other hand are the complete opposite. And China has only one interest, which is China. Its like Churchill said: "In geo-politics there are no friends - only interests." And thats valid for all countries, also for those in NATO.
I wouldn't even rule out that the US (or the western alliance so to speak) strike a deal with the Chinese if Putin keeps annoying them: China gets Siberia, and the west gets the european part of Russia. And there is nothing the Russians can do about it - other than to blow themself up with nukes.
Remember also that doesn’t include all the gold that China is mining in their own country. Which is a lot, they have one of the highest gold productions in the world.
Yes, all they have to do is wait. Keep on stacking, avoid war and they're likely to come out on top with the biggest stack.
No doubt in my mind. I don’t believe that the US has as much gold as they claim to have. Unless they are trying to really secretly hide it. Which I don’t believe they are smart enough to do.
Meanwhile, the Central Bank of me has at least ...6...7...8... gold coins, that puts me far, far less than what China and Russia has but more than what the Bank of Canada has, imagine that!
SGS members hold more than our central bank.
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