Experiences in Asian culture concerning
paper money has not been so good, historically they have more tangible assets
than we Americans do. With the economy
in such disarray, it looks like our own negative fiat experience is just
beginning with the monetary challenges that we face in the East and West. China
and India combined make
about one third of the global population, this is not including Russia and Iran
who both seem to be on the same page as China
and India. Historically having and buying bullion has
been a strong cultural way to secure their disposable income for centuries. Gold
has not just been a social standard for these countries but a necessity, an
insurance.
The SGE is pushing to provide gold options; this
could change the London
fix price, something that they have been working on for some time now. So will we see a mass selling spree of
bullion? I think not, not when it comes
to physical gold. We are not seeing just
a trend in the buying of gold; we are experiencing a major shift in structure
as a whole. Russia
and Asia are acting like their own CB by
veering from the flood of QE and securing their own currency truly diversifying
their own wealth backed by gold not oil.
For instance, Russia bought 37.3 tonnes of metal during
a time when political tensions are at a high and Putin’s own currency is
falling hard, they buy gold. Putin does
not seem concerned with much but the buying of metal, since this was the
largest amount by the CB in the last fifteen years. Putin’s battle with the bankers seems to be reminiscent
of the Battle of Stalingrad or Napoleons invasion, he is finding a way to
defeat the fall of his currency by investing in gold. We are seeing this with China and India showing high numbers from the
SGE surpassing last years. The festivities
this week in India
caused gold to reach a high, during this week 20% of gold purchased annually
happens during this festival. In India, half of
the jewelry bought in a year is for the some 10 million lavish weddings that
take place, some lasting days. Where the
gold that is bought and passed down to the new families is considered more
important than the bride and groom. Since
they are the second largest buyers of physical gold India makes up about 32% of the
worlds gold buyers, we see a lot of volatility with the price as the puppetries
try to keep it below a reverse level.
Fear of the FED and higher rates cause
traders to get cold feet when it comes to gold, and you see more and more of
the fluctuation in price and stocks as the market swings. All this year we have
been seeing an anti gold campaign in the two largest buyers of the precious bullion
with luxury bans. We have to remember
that India’s Reserve Bank is
a branch of England’s
(Rothschild’s). These countries seem
resistant to the ban and gold and metals are still in high demand, so why is it
still low? That way they can buy it up
at a low cost.