Sunday, June 30, 2013

Russia and China Building their Gold Reserves

Western economic commentary on China and Russia is usually coloured by monetarist assumptions not necessarily shared in Moscow and Beijing. For this reason, Russian and Chinese fiscal and monetary policies are misunderstood in financial markets, as well as the reasons their governments buy gold.

China has been notably relaxed about her own people acquiring gold, and the government itself appears to be absorbing all of China’s mine output. Russia is also building her official reserves from her own mine supply. The result over time has been the transfer of aboveground gold stocks towards these countries and their allies. The geo-political implications are highly important, but have been ignored by western governments.

China and Russia see themselves as having much in common: they are coordinating security, infrastructure projects and cross-border trade through the Shanghai Cooperation Organisation. Furthermore, those at the top have personal experience of the catastrophic failings of socialism, which have not yet been experienced in Western Europe and North America. Consequently neither government subscribes to the economic and monetary concepts prevalent in the West without serious reservations.

Monday, June 10, 2013

Deutsche Bank to Open 200-tonne Gold Storage Facility in Singapore

SINGAPORE (Reuters) - Deutsche Bank is opening a gold storage vault in Singapore that can hold up to 200 tonnes of the metal as it looks to capture surging demand for bullion in Asia.
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"This offering will encourage a significant development in a Singapore-based precious metals market," Ronan Donohoe, Deutsche Bank's global head of metals and dry bulk trading, said in a statement.

Deutsche Bank already has precious metals trading, financing and physical distribution operations in Singapore. The bank said the new vault would be one of the largest physical holdings of gold in the city state.

Tuesday, June 4, 2013

China Want the Yuan to Emerge as a Gold-Backed Currency in the World

Philippa Malmgren is an insider's insider. She was Special Assistant to the President for Economic Policy on the National Economic Council recently commented:

"The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyer of gold, mainly in large off market. They want the Yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue. The recent bilateral currency deals with Australia, France Russia and Singapore, and many others, reflect this desire to displace the USD as the world's reserve currency. It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility."


So what is her advice to investors:

"Gold bulls have a rare chance to double up now. Gold bears will have a hard time doubling down from a record profit. Meanwhile, apparently the Indians and everybody else in the emerging markets recognizes a good deal when they see it. As inflation pain continues to make headlines from high tomato prices in Brazil to the same for onions in India, no emerging market investors have any illusions. Inflation for them is here for the duration. A gold backed Yuan is increasingly sounding like a sensible idea."