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Why Are Russia and China Stockpiling Gold?

By LINDON, Utah - June 11, 2019 No Comments

Russia and China seem to have learned something from the 2008 financial crisis. Since then, they dramatically increased their gold reserves. Meanwhile, America and other western powers did nothing. We must act soon to deal with this new economic threat from China and Russia.

Russia gradually built up its gold reserves each quarter for over a decade. Perhaps it is not a coincidence that Russia's power and influence have been growing. Many nations, including the United States, started imposing sanctions on Russia after it annexed the Crimean Peninsula. Our government froze their accounts, but the Russians were ready. The US government cannot freeze gold that you hold directly. Whatever else you think of Vladimir Putin, it must be admitted that buying gold every quarter is an effective way to build wealth. Russia's gold reserves are up more than 300% since the beginning of 2008, so Putin is prepared for the next crisis. 

China followed a different path to growing its gold reserves. The People's Bank of China made massive gold purchases in 2009 and 2015. Both of these buys came after relatively weak years for gold prices, and China did well both times. Don't be afraid to buy gold after a price dip. In total, China's gold reserves increased over 200% after 2008. Trump's tariffs also seem to be scaring the Chinese. China appears to be moving toward Russia's strategy of gradual gold purchases. 

While renewed Chinese gold buying is a cause for concern, the global picture is even more alarming. Central banks bought over 650 metric tons of gold in 2018, the second highest amount ever recorded. The all-time high was not in 2008 or 2009, but way back in 1967! That was a few years before America went off the gold standard and set off a decade of inflation. Central banks knew what was going to happen, so they prepared. Now, they are preparing again. The world is getting ready to abandon the US dollar as a reserve currency. Unfortunately, our government bought no gold during the last decade while China and Russia dramatically expanded their reserves. 

You can prepare for the next crisis by building gold reserves of your own. During the 1970s and the 2000s, holding gold was the easiest way to make money during recessions. Gold reserves protect your savings just as well as they protect central banks. Russia and China are stockpiling gold because they realize that the US dollar is in danger. Our government is not ready, but we can protect ourselves and our country by buying gold today.