Money

Once the Maginot Gold Line is broken, that creates the conditions for the Chinese Gold Line which means a panic to get hold of gold and permanent shortages. So the current complacency in the West that gold has lost its lustre and serves no purpose is extremely dangerous.

The Chinese government saw already 48 years ago that Nixon’s decision to end the gold backing of the dollar would be the end of the dollar and the Western monetary system. No one believed their prophecy at the time. But they are being proven right.

China has joined a global central bank gold rush in the last two months by increasing its official gold reserves, even though the purchase remains modest compared to the volume of the mainland’s foreign exchange reserves, according to data released by the People’s Bank of China on Monday.

Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio: a source of long-term returns, a diversifier that can mitigate losses in times of market stress, a liquid asset with no credit risk that has outperformed fiat currencies, and a means to enhance overall portfolio performance.

The lack of audits and the massive trading of paper gold, does point to the fact that there is something more sinister going on in the gold market. This is all likely to be revealed when the real pressure on the dollar starts and gold rises fast. At that time paper holders of gold will ask for delivery and China and Russia will call the US bluff.

A surge in gold purchases by central banks to the highest since 1967 helped push global demand for the metal up 4 percent last year, the World Gold Council (WGC) said on Thursday.

Venezuela will sell 15 tonnes of gold from central bank vaults to the United Arab Emirates in coming days in return for euros in cash. In total, the plan is to sell 29 tonnes of gold held in Caracas by February.

Many people use goldbug scathingly as a pejorative as they have never bothered to understand the significance of gold. So why have I, and a few others, been advocating the ownership of gold for the last 17 years without being goldbugs?

Anyone who wants to protect their wealth should not be invested in any of the bubble asset markets. But to also avoid counterparty risk is a lot harder.

Russia has overtaken China to become the world’s fifth largest official sector holder of gold as Western sanctions drove buying by its central bank to record highs in 2018, its data showed on Friday.