China and Russia Still on Gold Buying Spree
Many analysts believe Russia and China want to cut their dependence on US dollars and euros. Former Bank of England Gov. Mervyn King said owning gold allows the Chinese and Russians more control over their own financial destinies:
"China and other countries do not want to be in a situation where all their international assets are in effect dependent on the US…It is extremely reasonable to have assets in your portfolio that are not dependent on the goodwill of other countries.”
Last December, Russia announced plans to increase its gold reserves to $500 billion within the next five years. As a Russian publication put it, “Gold is considered to be a buffer against external economic risks and is currently in favor in Russia.”
A year ago this month, the Chinese central bank announced its gold holdings had grown by 57% to about 1,658 tons. It was the first official update to China’s gold reserves since 2009. Many analysts believe the Chinese actually own more gold than the official numbers indicate – possibly a lot more.
DYI Comments: Apparently the Russians and Chinese have read the same demographic tea leaves. The U.S. will experience with its massive private sector debt and unfunded social programs will resort to direct (HELICOPTER MONEY) money printing to offset the tax receipt shortfalls, ending any possible social unrest(riots - anarchy etc.). They know eventually this will lead to devaluation of the U.S. dollar. Russia or China not wanting a depreciating asset. So many grams of gold per barrel or so many grams for manufactured goods will be the price; how many dollars that will require is a U.S. problem. If this occurs; I believe is a high probability event, will be the beginning of the end for the U.S. dollar being the reserve currency.
In the short term this will cause economic pain for America. The longer term America will have to face directly their financial folly reforming our financial system as was done during the 1930's. This will NOT end the U.S. as a superpower. Geography still matters. America has access to both the Atlantic and Pacific oceans with well developed ports dotting the east, west and gulf coasts. Natural resources along with a diversified economy. An educational system that will be improved(student loans will be fixed) at all levels. America will once again be very competitive. Perfect? Not a chance. In the mid to late 2020's America will surge ahead with an increasing population along with a smarter immigration program pushing our population closer to 400 million. America will be powerful just a bit more humble financially.
Once the good old USA is past this rough patch America will once again be a beacon of hope!
Hang on to your hats and cash better values are ahead!
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