Now he did it again. Putin bought gold. I mean, not him personally. But Russia bought gold. Issuing Bank. And not a little, and 48 tons in a single month. It already means something. Moscow immediately received exactly 1.5% of annual gold production.
It was the largest gold purchase by Russia in the last 20 years. Within 24 months the gold reserve of the Kremlin increased by almost 50% and reached 1542 tons. Thus, Russia is only slightly behind the second largest buyer of gold on the planet. Meanwhile, China has accumulated 1840 tons.
It seems strange after such a strong 2016 the price of gold fell again. The shock of victory, trump was not. Instead, won the stock markets, while government bonds and gold was in decline. Investors from the category of safe immediately fell in rich risky level. But Russia and China continue to buy gold. What happens? How to reconcile this?
The answer is quite simple, but it is preferred not to hear the daily noise and market Creek: gold is a long story. Too long for most speculators and many investors. But just suitable for large Central banks and small investors. And, of course, gold is a political metal. If someone wants to know where all this will lead, he must follow the issuing banks. Because these giants determine the route. And the money, and in gold. After all, since the financial crisis there have been some changes. In 2010, Central banks around the world have again sided with the buyers. That is, they take from the market more gold than put on the market by sales.
It was the second big move for gold. The first was with the introduction of the Euro. Then the European Central banks have agreed to block their purchase of gold. "Now Central banks are buying again exactly a net 350 tonnes per year," says David Marsh (David Marsh). Author and monetary expert is the co-founder of OMFIF (Official Monetary and Financial Institutions Forum). Marsh has written several books about money and gold. Including fundamental work.
"We are talking about two things, says Marsh. Developed countries do not sell, and a number of developing countries to buy. They do this because they are for political reasons not to fully trust the dollar." The Russian put it more diplomatic, but no less clear. "The price fluctuates here and there. But gold is a guarantee against legal and political risks", — said the gold Dmitry Tulin from the Russian Central Bank. The Chinese have also become very transparent. If a few years ago the true size of their reserves kept secret, now regularly publishes data on monthly purchases.
At the same time the gold market in China is massively expanding. Peoples Bank of China makes no secret of the goal of this action. The gold should help to make domestic currency, the yuan a globally recognized reserve currency. "There are also a lot of speculation about how much gold can be hoarded in China," said Ken Hoffman (Ken Hoffman) from Bloomberg Intelligence in an interview with the newspaper "Diе Presse". Hoffmann — expert for raw materials of the analytical division of Bloomberg. "China loves gold. And China likes stability. I once asked one equity banker from Mongolia, and its why the country is buying gold. If gold is important for China, it is important for us, he replied". Meanwhile, have there own, the price of gold in yuan. And she sometimes significantly different from the cost in dollars. That is the mark of a new era?
Hoffmann for fun calculated that it would be if China has given its currency with gold. However, he came from 10 thousand tons in the vaults of the people's Republic, that is five times more than the official reserves. As a result, the price of gold will then rise to 64 thousand dollars per ounce. "If they want to ensure that gold is only part of your money, it will be enough and $ 5,000," says Hoffmann.
"These figures, of course, illusory, says David Marsh. — Gold is a safety net, and, probably, on a psychological level. Today debts are so high that they are impossible to repay with gold. For this, the price should rise to astronomical figures".
Indeed, today no one talks about the return of currency, backed by gold, although the theme of gold in China and in Russia much more popular than in the West. Austria and Germany, where buying lots of physical gold, are the exception. "The people that buy gold, often have had negative experiences with inflation. Therefore, the Germans and even today a lot of buying of gold, although hyperinflation was already a hundred years ago, says Ken Hoffmann. — The Chinese have had a similar experience with inflation. They see gold as something that saved the Emperor, and say to yourself: I'll do that".
Oddly enough, but now the danger for gold prices comes from another country whose citizens are literally crazy about yellow metal. Currency reform in India also blew up the local gold market. Now speculating even about banning imports. The fact that the price of gold after the fall in November will be back soon, no guarantee. Still has existing since 2011 (calculations in dollars) the gold market with a downward trend. Analysts believe that it can come back even three-digit numbers, if a long time is reached the price of $ 1170 per ounce.
For investors that focus on the long term, this means opportunities for shopping. You just need to do so, as do the Eastern banks of issue. The giants who are already buying gold. Crucial will also be the inflation expectations and interest rate policy of the Federal Reserve. The price increase in 2016, too, began with a change percent in 2015.
Nikolaus Of Jilg
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