The Golden Truth: Russian Central Bank Gold Purchases Soar In May

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 http://www.coinexpert.com/:

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 gold...et tu Brute?

3 comments:

EconomicDisconnectSunday, 20 June, 2010
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.
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Dave in DenverSunday, 20 June, 2010
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...
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Anthony MawSunday, 15 August, 2010
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.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.