For all intents and purposes, some of the most influential investors, monetary officials and financial pundits in the world completely deny gold’s value as a unit of monetary exchange and crisis reserve. As worthless as it is, however, tens of billions of dollars have recently been shifting into this archaic asset of long forgotten empires.
In the last seven months alone the People’s Republic of China has added more gold to their reserves – over 500 tons – than the entire holdings of the European Central Bank. They aren’t alone.
Russia’s President Vladimir Putin has been aggressively investing into the precious metal over the last five years – spending some $500 million monthly as he diversifies his country’s assets out of Dollars and Euros. Currently, 9% of Russia’s reserves are held in gold.
This, of course, begs the question: why?
According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.…
On the one hand, it’s an investment that by most modern standards seems to make no sense. It generates no cash flow and serves no practical purpose. But there’s another way to look at gold: As the most liquid reserve in times of turmoil, or worse.
The big story of our era is not that the Spanish government is broke, nor is it that Paul Ryan apparently feels the need to embellish his running record.It’s that the United States, which has dominated the world’s economy for several lifetimes, is in relative decline.…
We will soon be the first people in two hundred years to live in a world not dominated by either Pax Americana or Pax Britannica. This sort of changing of the guard has never been peaceful.
The declines of the Spanish, French and British empires were all accompanied by conflict. The decline of British hegemony was a leading cause of the First and Second World Wars. What will happen as the U.S. loses its pre-eminence?
Maybe this will turn out better than similar episodes in the past. Maybe the Chinese will embrace an open society and the rule of law. If you believe that, there is probably no reason to hold any gold.
On the other hand, we may be about to enter a much more turbulent and dangerous era of power politics and international competition. Source: Market Watch [via Ulsterman Report]
Throughout history we’ve seen what happens when nations collapse under the weight of their own debt. It has almost always led to war across the entire known world. And when those nations collapsed and were overtaken, their conquerors often exterminated their populations and always confiscated their treasure, which usually amounted to gold, food and other physical resources.
Valdimir Putin, like many precious metals investors, seems to think so, and he’s preparing for a world where the U.S. Dollar, the Euro and other paper assets no longer exist. Nearly 1/10th of his country’s reserves are held in gold. The Chinese officially report 2% of their reserve assets to be held in gold – but it’s often the case that the Chinese don’t like to show all their cards, so there is a strong possibility that they have much more in precious metals holdings than we’re able to verify.
Those who have lived through serious global paradigm shifts and studied history understand what has value when the prevailing political, social and economic systems collapse.
Financier George Soros, who knows a thing or two about crisis and calamity, was there when the Nazis were rounding up Jews in his home country of Hungary. He’s seen the signs before and recently warned of a massive financial collapse, conflict across Europe and violent riots in America. In August he unloaded all of his holdings in major financial institutions, and like Vladimir Putin, moved a portion of his wealth into gold.
If you believe that the economic recovery touted by the elite political class and mainstream experts is real, then by all means take out some more credit and buy a new car, pick up an investment property, and take a two week vacation to a far-off island.
If, however, you think that Vladimir Putin, George Soros, the Chinese and the many others who are warning of an unprecedented global crisis may have an understanding of geo-politics and the real state of the global economy, perhaps it’s time you follow their lead and diversify into investments that will keep you alive in a worst-case scenario. ]
And so the tough questions are being asked by somebody, are you asking yourself these same questions? I’m not endorsing the idea that America will fall into financial ruin and be gobbled up by Russia and China like a recent shocking report that was just released by a Russian strategist but I am suggesting that we need to consider what the new reality in America will look like. You have to at some point ask yourself; how can we actually get a recovery, and to what prior economic status would we need to return to in order to constitute a recovery, if 2/3 of our manufacturing base is now outsourced and have no jobs to go back to? You have to ask: how long will the world be willing to define their recoveries in a reserve currency that is constantly shedding value due to constant dollar devaluation by the FEDs inflationary policies? Once you have asked these questions, there are plenty more to ask but these will do for now, you must ask yourself what would the best play be for you and what’s left of your net worth should these scenarios play out or a variation of them.
The most ironic development since the housing crash began back in 2008 in my opinion is when Dr. Ron Paul asked the FED boss Ben Bernanke if he considered gold to be money, to which he replied: “NO, it’s simply an asset”. Dr. Paul then went on to ask why then do central banks hold gold? To which he replied “its simply due to tradition and nothing more”!!! Even if you hang on every word of FED SPEAK as if it were the “Word of God” you now have to admit that this answer was dishonest at best and purposely designed to distract those watching from seeing gold as a good asset to offset the financial turmoil we are all forced to endure as of late.
Regardless of whether or not you believe Mr. Bernanke, EVERY OTHER NATION ON THE PLANET IS STOCKING UP ON GOLD BULLION AHEAD OF WHAT SOME FEAR IS A LOOMING DOLLAR CRISIS AND EUROPEAN BANK CRISIS THAT COULD SPREAD TO US BANKS OVERNIGHT. At what point will we as Americans be willing to look outside what the corporate media tells us and instead take note of what is actually happening in the world around us? At what point will people read a history book and realize what is happening here is an international currency war and has happened many times before throughout history and it never ended well for those who went along with the official story?
Establish your “Plan B” in physical gold & silver bullion and begin to participate in the sound money debate like EVERY OTHER COUNTRY ON THE PLANET IS DOING. Remember that it is a far better strategy to PREPARE your portfolio than to attempt to REPAIR your portfolio once the damage has begun. Tick, tock.