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Brett Arends: Why is Putin stockpiling gold?

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Published : September 07th, 2012
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Category : GoldWire

 

 

 

 

Maybe it's because the Russian government has known about the Western gold price suppression scheme since learning about it from GATA in 2004:

http://www.gata.org/node/4235

Maybe it's because the Chinese government knows all about it too:

http://www.gata.org/node/10380

http://www.gata.org/node/10416

Maybe it's because practically everybody in the gold market knows about it except those who get their news and commentary only from the Western financial media.

Chris Powell



* * *

Why Is Putin Stockpiling Gold?

Commentary: Russia is bulking up its gold reserve

By Brett Arends
MarketWatch.com
Wednesday, September 5,2012

I can't imagine it means anything cheerful that Vladimir Putin, the Russian czar, is stockpiling gold as fast as he can get his hands on it.

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.

It emerged last month that financial gurus George Soros and John Paulson had also increased their bullion exposure, but it's Putin that's really caught my eye.

No one else in the world plays global power politics as ruthlessly as Russia's chilling strongman, the man who effectively stole a Super Bowl ring from Bob Kraft, the owner of the New England Patriots, when they met in Russia some years ago.

Putin’s moves may matter to your finances, because there are two ways to look at gold.

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. Warren Buffett has pointed out that we dig it out of one hole in the ground only to stick it in another, and anyone watching this from Mars would be very confused.

You can forget claims that it's "real" money. There's no such thing. Money is just an accounting device, a way of keeping track of how much each of us produces and consumes. Gold is a shiny and somewhat tacky looking metal that is malleable, durable, and heavy. A recent research paper by Duke University's Campbell Harvey and co-author Claude Erb raised serious questions about most of the arguments in favor of gold as an investment.

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.

As was first reported here in April of last year, according to International Monetary Fund calculations, the United States is on track to lose its status as the world's biggest economy -- when measured in real, purchasing-power terms -- to China by 2017.

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.

Not long ago, world gold reserves were mainly in the hands of the U.S. and the Europeans, which accumulated their holdings during their centuries at the top. The U.S. has 75 percent of its currency reserves in gold. Many other First World powers have comparable proportions.


Read the rest of the article here

http://www.marketwatch.com/story/why-is-putin...ld-2012-09-0...


 

 

Data and Statistics for these countries : China | Russia | All
Gold and Silver Prices for these countries : China | Russia | All
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