Crumbling U.S Empire Drives Russia & China To Move Into Gold

(By Tactical Investor)

Russia-Chinese-Gold-ReservesCentral 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.

Russian-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.

This article was written by the Tactical Investor, originally found out Mining.com website.

UPDATE:  I will be soon releasing a new BULLET REPORT on the Gold Market.  It provides charts and data on how the recent flows into setting up the Gold Market for a big move in the future.

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15 Comments on "Crumbling U.S Empire Drives Russia & China To Move Into Gold"

  1. ” Last year countries purchases close to 590 tons of Gold accounting for 14% of annual global gold bullion demand.”

    14%???

    How about other reports that say China, Russia, and India together bought more than the entire worlds mines output?

  2. Why doesn’t Russia start it’s own gold exchange…NO futures, just market pricing..in the meantime, why don’t they just BUY all the contracts out of GLD, and IAU, and all the paper gold etf’s, thus, putting a swift END to all futures trading? Simple, easy idea on how to crush the USA, and, China, all at once, unless they decide to allow trading in crypto-currencies that are backed with gold, which they would monetize…this is all so simple, a novice like me can figure this out!!!

    • “Simple, easy idea on how to crush the USA…”

      I think their preferred method, when the time is right, is cyber attack.

    • cal, of course China or Russia could break the west financially any day they’d like. But why should they? Why put in a order of 1000 mt in cash (a measly 41 billion US dollars – the ECB is easing this amount every 2 weeks now !!!) knowing they would never get the fizz? If they can slowly and steadily stack an get much more and the better longterm and strategic end-game ? Why should they make such a declaration of (financial and possibly world) war ?? The global financial and economic system would freeze within a few hours and I do not think that this is their plan… (not to say that this will not happen one day, but I think this will happen when the western CBs panic – maybe due to their empty vaults (???) or a global loss of confidence in their currencies (especially the US dollar).

  3. Cal,that’s what i don’t get…Sprott,Morgan,Russia,China,UAE…etc…with insignificant purchases can cause a force majeure on the COMEX…makes me suspect…AG tiny market…don’t trust any state,country,hedge fund…etc as the ag ponzi WOULD have been over years ago,duh.

    • Why would China and Russia want to force it to a head when they still have US$ they want to get rid of? Much better to keep buying at the lowest price for as long as they can.

    • Comex can always cash-settle and not deliver. Being levered roughly 5 to 10 times to one (# of contracts vs. “total holdings”- assuming it’s all there…) they, in some way, have already defaulted on their future physical deliveries, should only 20% of all longs want the fizz (which they obviously don’t). The situation is so much worse if one considers the holdings that are for sale at current prices… then the leverage is north of 250 to 1… Got fizz ???

  4. This doesn’t make sense. If the annual gold production is ~2800 tons and these countries have only these stated amounts, where is the rest going? In only ten years there should be 280,000 tons somewhere, The U S has supposedly 8,000 tons, so there is a bunch of gold not accounted for .
    Also where did they get the non historically supported concept that a super power lasts 250 years? It’s a statement that begs the question. It must be the Romans. There have been numerous empires before and after the Roman, yet none meet the criteria the writer has telepathically conveyed from Putin.

  5. Saxon the 250 years is a rule of thumb by many authors and political historians here are a few on the web here is one,
    http://thediplomat.com/2010/04/when-superpowers-fall/1/
    The theory goes like this…. The US has really only been the major world power since 1917 or so, and it was not fully seen as such until about 1945 or so, obviously. That’s only 67 to 95 years. Even if you combine the British Century (1815-1917), that’s 169-197 years so far, not long at all. The Islamic golden age lasted 500 years, the Roman Empire lasted 500 years not counting the Byzantine, the great Chinese dynasties about 250 years each. The Gupta empire lasted 250 years. The period of Anglo domination including the British could easily go 500 years total, although with the pace of history accelerating in the modern world it may only last another 100 years or so….
    Hope it helps… Google could find all the references on the web..

    • Frank
      I am aware of those-the question was rhetorical. The ones you quote regarding the British,American, and Roman/Byzantine should alert you to that fact. The other ones could never be intelligently classified as “superpowers” which is a modern hyperbole. There was never an “Islamic Golden Age” that lasted 5000 years. That misnomer applied to the Persian philosophical movement in the 8th and 9th C ACE called the Mutazilites. They were effectively quashed by the devout Muslims called the Asharites by the mid 11th C who followed the true interpretation of the Koran and Hadith.
      Maybe this helps you to understand history somewhat better and what is happening in current times.

      • should read “500 years” for IGA

        • Saxon,
          With your greater perception of history on both the occidental and oriental cultures what would you say is the historical average life expectancy of a dominate world power?

  6. Actually, out of the 21 civilizations that have existed since humans have been able to advance that far, 13 are dead (Minoan, Greek, Egyptian, etc.), eight are dying (Indic, Synic, etc.), and only one is still hanging in there. That is the Western civilization. In the Western civilization there is only one country that is hanging in there, and that is The United States of America. The rest are in deep trouble (that’s not to say America is not having it’s share of problems).

    Some societies that are in the death throes and will never recover are Russia, China, all of South America, Africa, and the midl-east to name a few. Economics, creativity, inventions, etc. have nothing to do with their demise. It took the Egyptian civilization 2000 years to die out completely at about 500AD after it gave itself its knock-out blow.

  7. Saxon

    The article is only referring to gold put into official reserves, it does not include gold imported and consumed by non-official, domestic entities.

    In 2015 the Shanghai exchange reported withdrawals of 2,596 tonnes. Of that about 1,904 tonnes was imported from outside China (all domestic gold c. 442t goes through the SGE but remains in China).

    In 2014 the total supplied to their domestic market was 2,103 tonnes of which about 1,398 tonnes was imported from abroad.

    The total to the domestic market in 2013 was 2,197t, 2012 it was 1,110t, 2011 it was 1,044t, etc, etc.

    India’s domestic market consumed 914t in 2015, 747t in 2014, 727t in 2013, 922t in 2012, 1,031t in 2011, etc, etc.

    Then there is the rest of the world’s domestic consumption. So it is easy to see where all the freshly mined gold went. What is more difficult to see is where did the overall shortfall in supply come from!

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