East trusts in physical gold while West prefers ‘mindless optimism’ – Claudio Grass to RT

Saturday, November 3, 2018
By Paul Martin

3 Nov, 2018

The latest data from the World Gold Council (WGC) shows that central banks in Eastern Europe and Asia significantly boosted their gold holdings. The regulators purchased 148 metric tons of gold in the third quarter of 2018.

The figure indicates an increase of 22 percent against the same period last year, while some $6 billion dollars were spent on the precious metal. Russia, Turkey, Kazakhstan, India, as well as Poland and Hungary were the leader among gold net buyers.

The reasons pushing Russia, Turkey and other countries facing US sanctions to buy more gold seem clear. But why are other countries bolstering their gold reserves and why do they find it necessary to diversify their holdings? RT talked to Claudio Grass, an independent precious metal advisory based out in Switzerland to find out why emerging economies are so active in stockpiling gold bullion.

RT: For years, Russia, China, India as well as many Asian countries have been stockpiling gold. More recently, countries like Poland and Hungary have begun to increase national gold reserves. What’s behind the move?

Claudio Grass: Let’s look at the core motivation that drives anyone to become an owner of physical gold. Whoever buys physical precious metals, be it an institution, an individual or as we see now, central banks from different countries, largely have the same reasons for doing so: They all want to regain independence and sovereignty. This is achieved by decoupling from a financial system that is unsustainable, overstretched and founded on nothing but faith in government. As this faith is shaken and public trust corroded, it is wise for any individual or institution to own real goods directly themselves, rather than be another investor in paper bets and hope for the best. It is also useful to remember that many central banks are in the habit of publicly promoting one position but acting on another. While they might exude confidence in the economy and bask in what they promote as the success of their reckless monetary policies, they fully understand that gold is really one of the best reliable hedges in times of economic turmoil. That’s why we see this massive buildup of physical gold stocks. In other words, when it comes to taking one’s investing cues from institutional actors; it might be wise to follow to the old adage “Do as I do, not as I say”.

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