Sunday, June 20, 2010

Russian Central Bank Gold Purchases Soar In May - China Too?

Russia's Central Bank reported purchasing 1.1 million ounces of gold in May.  This is a staggering 31.21 tonnes.  The chart below is from Richard Nachbar at

Separately, a member of the finance committee of China's National People's Congress has called on the Government to increase its holdings of precious metals and oil: "China should adjust the asset structure of its foreign reserves and achieve the goals of making the investment safe, liquid, and preserving and adding value" - here's the link:  LINK.

Gold set a new all-time weekly high close against the dollar this past week.  The was preceeded by all-time highs in gold in the Swiss franc, British pound and euro.  James Turk wrote commentary with some excellent charts to show how the price of gold is beginning to accelerate against global fiat currencies:  Gold Starts To Gallop.  Mr. Turk sent me the following comment in response to my Friday posting on silver:
A short squeeze is inevitable I believe, and this is a good time to expect one to happen. There seems to be an unusually large focus at present on the precious metal seasonals - summer is normally a weak period for the precious metals. It doesn't always happen that way of course (like in 1982). So a short squeeze could catch a lot of normal longs off-guard if they are waiting to buy the dip that never comes.
I have expressed to colleagues for a while now that I thought there was chance that gold/silver might, contrary to the typical seasonal pattern, stage a surprise move higher in June/July.  Sensing that the physical demand in the market is starting to overwhelm the paper selling (just ask Russia), I have been thinking that the market would be set up to take advantage of a price correction that doesn't happen and scramble to re-establish long positions.  We'll see how the next 6 weeks play out, but I always feel good about my views when they correlate independently with Mr. Turk's.

Finally, a commentor sent me this article from Canada's Globe and Mail about California being on the verge of systemic failure/total insolvency:  California On The Financial Precipice.  Interesting that Canada is reporting the kind of truth that gets buried by the U.S. media.  The fact of the matter is that what is occurring in Greece, Spain et al is a mere prelude to the kind of financial tsunami that will hit the United States.  Perhaps this is why Russia and China are hastening their Central Bank diversification into tu Brute?


  1. Why would China and Russia want to buy worthless metals anyways????
    Snark on!

    Did a cook today, but it did not come out too great, what can you do.

  2. LOL. I'm sure you saw Saudis doubled their gold reserves. Everyone globally is buying gold except the hoi polloi in this country, which is dumping all they got into cash for gold buyers.

    I still have to get new grill - it's brutal living w/out one...

  3. Because in the absence of bartering for commodities (like food) and services, civilized man needs a universally acceptable currency. At the end of WWII the United States of America emerged victorious and therefore it's dollar became the de facto world reserve currency just as the British Pound Sterling once was. However since Nixon took the US dollar off the gold standard the US dollar is nothing but worthless paper, now computerized. This WILL all come to and end and the triggers may be domestic but will likely be global. People and governments are buying and hoarding gold because in the back of everyone's mind the US dollar is doomed but nobody likes to say it out (too) loud.