Survival And Prosperity

Behold The Golden Bear: Russia Now World’s Biggest Gold Buyer

For years I’ve heard the term “Russian Bear” being used to describe Russia and its might.

For example, “NATO better not put too many missiles in Eastern Europe, or they’re going to anger the Russian Bear.”

After reading this morning about Russia acquiring literally tons of gold over the last ten years, perhaps they should be referred to as the “Golden Bear” going forward.

Scott Rose and Olga Tanas reported on the Bloomberg website this morning:

When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

(Editor’s note: Italics added for emphasis)

I’m starting to see what legendary investor Jim Rogers was getting at regarding Russia.

While a number of “developed” countries are selling the precious metal these days- including economically-troubled France, Portugal, and Spain- “developing” nations are acquiring it with a fervor. Rose and Tanas added:

Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons, Grubb said by phone from London, where his industry group is based…

“That’s a very significant switch, and obviously a very positive one for the gold market,” Grubb said.

(Editor’s note: Italics added for emphasis)

Meanwhile, the price of paper gold is taking a hit this morning. Barbara Kollmeyer and Myra Saefong reported this morning on the MarketWatch website:

G-7 nations could release a statement this week reaffirming a commitment to “market-determined” exchange rates, responding to heated talk about a currency war…

The Group of 20 nations will meet later in the week, with currencies expected to be at the top of the agenda.

As gold has benefitted from currency devaluations, traders are wary of these developments.

In addition, light volumes due to Asia’s observance of the Lunar New Year and a lack of economic data being released today are fueling downward pressure on the gold price.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Rose, Scott and Tanas, Olga. “Putin Turns Black Gold to Bullion as Russia Outbuys World.” Bloomberg.com. 11 Feb. 2013. (http://www.bloomberg.com/news/2013-02-10/putin-turns-black-gold-into-bullion-as-russia-out-buys-world.html). 11 Feb. 2013.

Kollmeyer, Barbara and Saefong, Myra. “Gold hit on worry of possible G-7 currency salvo.” MarketWatch. 11 Feb. 2013. (http://www.marketwatch.com/story/gold-edges-higher-as-dollar-weakens-2013-02-10). 11 Feb. 2013.

Tags: central banks, China, currency wars, devaluation, France, G-20, G-7, gold prices, Jim Rogers, Marcus Grubb, money printing, Portugal, QE, quantitative easing, Russia, Spain, U.S. dollar, Vladimir Putin, WGC, World Gold Council