Putin is also aware the US is trouble, it’s basically monetizing its debt as it has no real money to pay its bill. 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.
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.
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.
Wall Street Hooked to Quantitative Easing And It could last for close to forever
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