Crumbling U.S Empire Drives Russia and China to Move into Gold

By: Sol Palha | Fri, Mar 11, 2016
Print Email

Central bankers have been on a massive Gold Buying Spree led by Russia and China. One must remember that not only is Putin ex-KGB, but he is also an economist and holds a black belt in judo. Judo teaches you to use your opponent's momentum to defeat him or her, and that appears to what Putin is doing. He has this administration running circles, by the time they figure out what he is up to, it is too late to do anything. Putin and China can see that the writing is on the wall that the days of U.S holding the top spot are numbered. Our economy is in shambles and only appears to look strong because of the hot money that is holding it up. Regarding illusions, it is a perfect illusion and for now, the masses have bought it, but Russia and China have not.

Putin is also aware that the average life span of a super power is 250 years, and the U.S has been in this position for 240 years, so it is running out of time. Hence, he is using the strong dollar to buy up cheap, valuable Gold. Russians are advanced chess players they plan several moves ahead; that is why the West has had such a hard time figuring out what Putin's next move will be. When the western media states that Russia's reserves are falling, they forget to mention that the reserves are in dollars and what Russia and China are doing are getting rid of their worthless dollars and replacing them with Gold.

IMF data (International Monetary Fund) shows that the Russia and China have been among the biggest net buyers of Gold for eight years in a row. Last year countries purchases close to 590 tons of Gold accounting for 14% of annual global gold bullion demand. Smart nations like Russia and China are using these low prices to load up on Gold and divest from the dollar. They understand that this economic illusion can last for only so long before reality strikes.

The chart below illustrates how Russia's reserves of Gold have soared over the years. Putin is planning for a day when the U.S is not the dominant power anymore. When the dollar is finally dethroned, the end will not be pretty.

Russia Gold Reserves
Source: http://www.tradingeconomics.com

The number of bilateral deals bypassing the dollar continues to soar. The opening of the AIB (Asian infrastructure bank) and with the Yuan being accepted into the world reserve currency club, the path for the dollar is definitely downhill.


Game Plan

Both China and Russia make for great long-term investments. In Russia YNDX and VIP are examples of two good companies investors can open positions in; in China, we have BABA, CHL, HNP, etc. Most importantly, it would be prudent to hold a position in Gold bullion. You can use declines to open new positions. We would not aggressively jump into Gold bullion unless you have a lot of extra cash lying around that is not being used. Gold is still not fully out of the woods yet as the trend has not turned positive yet. It has a solid wall of resistance to overcome at $1350. The monthly close above $1200 is a move in the right direction.

A multi-polar world order is emerging. The U.S can either embrace this new trend or be crushed by it. Once a trend is in motion, there is nothing that can stop it; the best you can hope to do is to slow it down. Sadly that is the current path the U.S has opted for; perhaps the next administration will be wiser.

 


 

Sol Palha

Author: Sol Palha

Sol Palha
TacticalInvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

Copyright © 2004-2017 Sol Palha, All rights reserved.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com