Russia, China and India increase gold purchases

Russia now has more gold than at any time in the last 22 years. In March it added another 30 metric tons to its gold stash bringing its total reserves to 1,238 metric tons.

i also hear that gold imports in India are also expected to be nearly 90% higher this month following India’s Central Bank easing on import limits. It must be wonderful to be able to legally manipulate a market in this way. If only you and I were allowed to do such a thing without facing imprisonment. Hey ho ….

How much gold does China really have?

The biggest news however comes out of China where the Central Bank (we believe) is increasing it’s physical gold reserves at break-neck speed. As you know, this is story has been a regular feature in my blogs, my newsletter and my website. The last time China officially reported its gold reserves the figure was 1,054 metric tons. Despite assurances by the Chinese Central Bank that this figure has not changed I have always said that the next announcement would come as something of a shock to the western world if the Chinese transactions recorded though Hong Kong were anything to go by.

So how much gold bullion does China really have?

As a blog writer, I doubt my estimate last year of over 3,000 tons counted for very much but yesterday Bloomberg Intelligence reported that China’s gold stash may well be over 3,500 tons. Their report will carry far more weight (pun not intended). If policymakers want to add the Yuan to the International Monetary Fund’s currency basket, known as Special Drawing Rights (S.D.R.) we may well see an announcement regarding their gold position very soon.

I do not think a tripling in their gold holding position would be unrealistic.

But don’t you find it odd that gold is considered to be an antiquated, out of touch, inappropriate relic for the new digital age and yet the central banks are loading up on the stuff? Why would they do that? Why would banks INCREASE their gold holdings if paper money is the best thing since sliced bread?

If gold is good enough for the central banks – it’s certainly good enough for me.

Will gold rise or fall in a currency collapse?

Some members of the Inner Circle have asked if a currency collapse would be good for gold or bad for gold?

It’s a good question and one which brings a mixed response. Some commentators like Harry Dent say that history proves gold has always fallen during a currency collapse in the short term. Dent believes gold WILL go to $5,000 a ounce but ONLY after a fall to much lower levels than we have currently. Dent refutes the argument that gold cannot fall below production costs in the short term and cites oil and property as all examples of a product that has fallen below the cost of production (in the short term).

Most other commentators disagree.

One thing both parties do agree on is that in the medium term, the gold price will go much higher than it is today so the question is what time scales are you looking at for your acquisition and sale?

As you know, my personal view is that owning physical gold and silver are excellent ways of protecting your wealth against the stupidity and greed of central banks. That is why I own both. My key point over the past five years has been that the average person simply does not have the resources or the wit to quickly move in and out of the silver and gold markets. I have always maintained that it is better, and easier for most people, to slowly acquire gold and silver over a longer period of time, usually several years, rather than try to throw huge sums of money into the market at what is hoped to be the very bottom. This will be the very moment that gold and silver are more hated than at any other time and I simply don’t think the average investor can do that.

Gold is an insurance policy for me so I simply cannot afford to gamble on further falls which may or may not happen before taking a position.

If you’re of a similar mind and are slowly building your own physical metal stash, I strongly recommend your gold and silver positions are in the physical metal NOT in paper. In the event of a currency collapse it is believed over 100 ounces of “paper gold” will be chasing every ounce of physical gold. Good luck with that if you’re the one with the piece of paper.

If Dent is right, and gold does fall significantly before its next meteoric rise, I won’t be upset. I will do what I always do – sit and wait – and move more cash into gold and silver by buying on the dips.