Saturday, May 25, 2019

Russia Accelerates its De-Dollarization Process, Adds Gold Bullion

Poland, Hungary, China, India, Turkey, Russia and many others have been active buyers in the physical gold market over the last year and it appears that at least one, Russia, has no plans of slowing down.

Russia has been very open about the fact that they wish to continue on with what they are calling their "de-dollarization" process, shedding their US dollar reserves and moving it into other assets, with the most notable being gold bullion.

This is a trend that has been accelerating for years, with it truly kicking off in earnest after sanctions began to rain down heavily upon Russia after the annexation of Crimea from Ukraine in 2014.

The United States in particular has had a heavy hand in its dealings with Russia, as they believed this move to be in direct conflict with Western interest.

Since 2014, financial warfare has been raging both behind the scenes and out in the open. 

A quick look through a timeline compiled by Radio Free Europe highlights just how many actions have been taken over the last five years and shows just how serious the West is in its goal of punishing the Russian Economy.

The effects have been severe, doing damage to the Russian economy, however, as they have so many times throughout history, the Russian people have pushed on, adapted and are surviving in their new geopolitical world.

The actions taken by the West and the constant beating of the war drum has not come without consequences however, as Russia has been forced to find alternative trade partners for their plentiful natural resources.

China, another country that is currently the target of scorn from the US administration has been forced closer and closer with Russia, finding an ally in both of their times of need.

It comes therefore as no surprise that they too are happily buying any and all natural resources they can get their hands on, stockpiling and preparing for not so sunny days.

This includes opening and buying mines around the world, anywhere and everywhere that they can.

Facing increased pressure and uncertainty is all the more reason for these two countries to continue in their accumulation of precious metals.

Russia is currently buying all domestically mined gold production, thus taking a huge amount of physical gold off of the market and making them the fifth largest holder of gold bullion reserves in the world.

This is a placing that I and many others believe will soon be a thing of the past, especially if they continue shedding US Dollars at the rate they are and moving these funds into gold bullion, which as they have stated, they intend to do.

Already Russia has quadrupled its bullion reserves over the past decade, adding a staggering 1 million ounces in February of this year alone!

First Deputy Governor Ksenia Yudayeva of the Bank of Russia had the following to say about their shedding of US dollars and addition of gold bullion;

“We have tried to bring this (reserves) structure into accordance with the risks we believe we may face.”

“This is why we significantly lowered the share of the dollar.”

Clearly Russia feels politically, economically and physically threatened and are trying to mitigate their risks and retaliate in anyway possible.

Unfortunately for the West, the true ramification of this entire process is the fact that physical gold bullion is draining out of the open market at a rapid rate and they are creating a new golden powerhouse within the world.

But why are both Russia, China and so many other countries fleeing the US dollar and moving to a safe haven asset such as gold bullion?

I believe it is because they can see the long term writing on the wall, they can see that change is coming, they are making their plans for the future and setting themselves up for what they believe to be success.

Ultimately, I believe they hope to dethrone the US dollar as the reserve currency of the world and replace it with one of their own, with gold bullion playing a major role in that process.

Remember always the golden rule, "He who has the gold makes the rules".