Concerned foreign central banks boost gold reserves – News Couple
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Concerned foreign central banks boost gold reserves


After sitting on the sidelines for much of last year, the central bank’s appetite for gold has resumed, in part due to inflationary pressures globally coupled with turmoil in the energy market.

Russia recently set a record for its gold reserves, and now ranks fifth in the world in terms of the size of its holdings.

Russia now has over 20% of its gold reserves! This represents approximately 2,300 tons of gold now owned by the totalitarian state, and this number is likely to rise significantly in the coming years.

Meanwhile, the central banks of Serbia, Hungary, Thailand, France and Germany have added gold to their reserves in recent months. Even Brazil recently bought 41.8 tons.

Heavy gold accumulation by central banks indicates a continuing shift away from the Federal Reserve’s note “the dollar” as the global reserve currency and indicates a continuing shift in global economic dynamics.

Over the past five decades, the irredeemable US dollar standard has been in effect. President Richard Nixon’s 1971 order abolishing the ability of foreign nations to redeem their dollar holdings directly for gold meant that the “full faith and credit” of the United States was all that underpins the global monetary system now.

Fifty years ago, the United States was still on a sustainable fiscal path. Its debt as a percentage of GDP came in at less than 25%.

Today, the United States is at full speed on a financially reckless path. Total official government debt is now 120% of GDP, and the Federal Reserve creates $120 billion of currency a month to buy Treasuries.

The custodians of the world’s reserve currency abused their exceptional privileges. They now risk losing the world’s trust.

The fact that foreign central banks continue to buy and hold gold should serve as a warning to all investors. It is clear that these central banks seek stability and diversification.

Not only can physical gold bullion serve these purposes, but it can also provide foreign central banks with additional credibility on the world stage.

A global shift away from the Fed note could have major ramifications for all of our fiat currencies. With the return of the US dollar to the US from abroad, the massive increase in supply could force its value to decline rapidly causing domestic costs to rise.

The decline in the purchasing power of the dollar has been more and more evident lately.

As the costs of everyday goods and services rise, more and more dollars are required to pay for them.

These extra dollars are no longer used for hiring or investing, but rather to maintain the status quo.

A depreciating dollar can lead not only to an economic slowdown, but also to a complete stagflation (i.e. stagflation).

Gold and silver have a strong tendency to move in the opposite direction to the notes of the Federal Reserve; Thus, the depreciation of the dollar causes the prices of precious metals to rise along with other tangible assets.

The major global central banks understand this relationship. Investors should as well.

The decline and decline of the US dollar as the global reserve currency could represent a major turning point in financial history. Currency notes and their denominated debt instruments may go down side by side. Investments in precious metals will rise.

Did you get the gold? got silver?



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