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Gold at all times has been a symbol of eternal wealth — wealth that is not afraid of the vicissitudes in the world economy based on paper currency. Signs have begun to appear lately that some governments have stopped trusting currencies and are buying gold to hedge against extraordinary circumstances.
Should private investors follow this advice? Definitely yes. To paraphrase a well-known phrase: invest in gold and sleep well.
The reason for this decision today can be considered almost any significant event in the global economy.
Capital outflows have continued almost continuously over the past 18 months. As of early 2014, central banks have seized approximately 246 tons of the precious metal from the New York Federal Reserve Bank.
Thus, the amount of foreign gold reserves held in the United States fell to a 20-year low. The last time a similar situation was observed at the beginning of the global financial crisis: from the beginning of 2007 to the end of 2008, the Fed lost about 409 tons of gold.
The new trend began three years ago by the EU countries: first, in 2012, Germany decided to restore its reserves of the precious metal. Then, a little later, Austria and the Netherlands joined it .
2. Gold will rid Russia of Anglo-American domination
Attempts by Russia and China to create an alternative gold market, according to the American economist Frederick William Engdahl, can help them overcome the Anglo-American global dominance in setting the price of the yellow metal.
Engdahl believes that the price on the New York and London stock exchanges does not reflect the real value of gold as a reserve currency and a standard of financial stability. According to the scientist, the main Western banks artificially keep the price of gold, controlling any increase that could threaten the role of the dollar as the world’s main reserve currency.
In turn, China and Russia are promoting the role of gold in every possible way. In May of this year, China established the world’s largest gold investment fund with a volume of 100 billion yuan ($ 16 billion) — the Silk Road Gold Fund. The fund will focus on investments in gold mining projects and companies, within the framework of the New Silk Road project, in which Russia also participates.
In the first half of this year, Russia has increased its gold production almost sixfold, many experts even say that the country is on the way to a “golden ruble. In turn, China does not give up the hope of making the yuan the world’s reserve currency, and therefore is also interested in backing its national currency with gold.
In the coming years, according to experts, China and Russia can create a new system, alternative to the dollar, and become the largest and fastest growing economies in the world.
3. Beijing tightens capital controls
Despite the fact that there is no official data on capital outflows from China, indirect evidence suggests that many investors are withdrawing funds from the Chinese market using sophisticated financial mechanisms.
China continues to introduce new measures in an attempt to curb capital flight, given the current instability in financial markets. These measures include regulation by the Central Bank, as well as instruments used by large financial institutions and law enforcement agencies.
Chinese businesses can only exchange yuan for foreign currency if it is dictated by their operational needs, such as paying off payments for imported goods and some approved foreign investments.
Financial regulators, along with law enforcement, have tightened controls over clandestine foreign exchange smugglers who make their living by helping Chinese people move their funds abroad. All of these measures are intended to protect the yuan from further fall after the controlled devaluation on 11 August.
4. China is a global investor
Over the past five years, China has purposefully made its way to the top three world investors, along with the United States and Japan. According to analysts around the world, China could become the largest international investor by 2020. What is behind this phenomenal success?
Since 2009, Chinese banks have provided more loans to developing countries than the World Bank itself. The Financial Times estimates that two Chinese state-owned banks — the China Development Bank and the Export-Import Bank of China — issued about $ 110 billion in foreign loans in 2009–2010.
At the same time, the Chinese economy has remained attractive to foreign investors: since 2010, about USD 106 billion has been invested in the Chinese economy.
Since 2009, there has also been a change in investment priorities. Previously, Chinese investors preferred traditional industries, but since 2009, exclusive industries and the high-tech sector have received special attention from investors.
In 2012 alone, China invested more than $ 10 billion in financial companies, while the real sector of the world economy received funds worth $ 77.7 billion.
It is no secret that the United States is the most attractive country in terms of investment for China. Over the past few years, the volume of investment from China in the United States amounted to $ 71.9 billion. Australia received just over $ 61 billion in Chinese investment and Canada nearly $ 39.4 billion, making it the third most important market for China. Most of all the Chinese are attracted by the energy sector of Canada. America is attractive to China in terms of the financial industry, and Australia in terms of the metal mining and processing industry.
Chinese investment has become particularly popular in Europe following the spread of the global economic crisis. In 2000–2014, Chinese companies invested over $ 46 billion in 28 EU countries. Most of the deals were made at the height of the crisis. Thus, in the period from 2005 to 2013, the largest recipients of investment from China were:
All these facts provide good food for thought. It is quite possible that tomorrow we will wake up in a completely new world, in which a new financial system will operate, “at the helm” of which will be completely different countries.
If this happens, you probably would like your savings not to lose their value overnight due to the devaluation of a particular currency. The surest way to avoid this is to invest at least some of your savings in physical precious metals.
If you’re interested in learning more about investement in gold and are considering investing, Visit Regal assets and get your Free Gold Kit and learn all you need to know about investing in gold.
Should private investors follow this advice? Definitely yes. To paraphrase a well-known phrase: invest in gold and sleep well.
The reason for this decision today can be considered almost any significant event in the global economy.
- Central banks withdraw gold from US vaults
Capital outflows have continued almost continuously over the past 18 months. As of early 2014, central banks have seized approximately 246 tons of the precious metal from the New York Federal Reserve Bank.
Thus, the amount of foreign gold reserves held in the United States fell to a 20-year low. The last time a similar situation was observed at the beginning of the global financial crisis: from the beginning of 2007 to the end of 2008, the Fed lost about 409 tons of gold.
The new trend began three years ago by the EU countries: first, in 2012, Germany decided to restore its reserves of the precious metal. Then, a little later, Austria and the Netherlands joined it .
2. Gold will rid Russia of Anglo-American domination
Attempts by Russia and China to create an alternative gold market, according to the American economist Frederick William Engdahl, can help them overcome the Anglo-American global dominance in setting the price of the yellow metal.
Engdahl believes that the price on the New York and London stock exchanges does not reflect the real value of gold as a reserve currency and a standard of financial stability. According to the scientist, the main Western banks artificially keep the price of gold, controlling any increase that could threaten the role of the dollar as the world’s main reserve currency.
In turn, China and Russia are promoting the role of gold in every possible way. In May of this year, China established the world’s largest gold investment fund with a volume of 100 billion yuan ($ 16 billion) — the Silk Road Gold Fund. The fund will focus on investments in gold mining projects and companies, within the framework of the New Silk Road project, in which Russia also participates.
In the first half of this year, Russia has increased its gold production almost sixfold, many experts even say that the country is on the way to a “golden ruble. In turn, China does not give up the hope of making the yuan the world’s reserve currency, and therefore is also interested in backing its national currency with gold.
In the coming years, according to experts, China and Russia can create a new system, alternative to the dollar, and become the largest and fastest growing economies in the world.
3. Beijing tightens capital controls
Despite the fact that there is no official data on capital outflows from China, indirect evidence suggests that many investors are withdrawing funds from the Chinese market using sophisticated financial mechanisms.
China continues to introduce new measures in an attempt to curb capital flight, given the current instability in financial markets. These measures include regulation by the Central Bank, as well as instruments used by large financial institutions and law enforcement agencies.
Chinese businesses can only exchange yuan for foreign currency if it is dictated by their operational needs, such as paying off payments for imported goods and some approved foreign investments.
Financial regulators, along with law enforcement, have tightened controls over clandestine foreign exchange smugglers who make their living by helping Chinese people move their funds abroad. All of these measures are intended to protect the yuan from further fall after the controlled devaluation on 11 August.
4. China is a global investor
Over the past five years, China has purposefully made its way to the top three world investors, along with the United States and Japan. According to analysts around the world, China could become the largest international investor by 2020. What is behind this phenomenal success?
Since 2009, Chinese banks have provided more loans to developing countries than the World Bank itself. The Financial Times estimates that two Chinese state-owned banks — the China Development Bank and the Export-Import Bank of China — issued about $ 110 billion in foreign loans in 2009–2010.
At the same time, the Chinese economy has remained attractive to foreign investors: since 2010, about USD 106 billion has been invested in the Chinese economy.
Since 2009, there has also been a change in investment priorities. Previously, Chinese investors preferred traditional industries, but since 2009, exclusive industries and the high-tech sector have received special attention from investors.
In 2012 alone, China invested more than $ 10 billion in financial companies, while the real sector of the world economy received funds worth $ 77.7 billion.
- Conspiracy theories: obvious and incredible
It is no secret that the United States is the most attractive country in terms of investment for China. Over the past few years, the volume of investment from China in the United States amounted to $ 71.9 billion. Australia received just over $ 61 billion in Chinese investment and Canada nearly $ 39.4 billion, making it the third most important market for China. Most of all the Chinese are attracted by the energy sector of Canada. America is attractive to China in terms of the financial industry, and Australia in terms of the metal mining and processing industry.
Chinese investment has become particularly popular in Europe following the spread of the global economic crisis. In 2000–2014, Chinese companies invested over $ 46 billion in 28 EU countries. Most of the deals were made at the height of the crisis. Thus, in the period from 2005 to 2013, the largest recipients of investment from China were:
- United States — $ 64.4 billion
- Canada — $ 37.8 billion
- Brazil — $ 31 billion
- Saudi Arabia — $ 18.2 billion
- Nigeria — $ 20.7 billion
- Continental Europe — $ 87.5 billion
- UK — $ 18.8 billion
- Central Asia — $ 112.6 billion
- Pakistan — $ 21.8 billion
- Russia — $ 17.5 billion
- Southeast Asia — $ 11.2 billion
- Indonesia — $ 30 billion
- Australia — $ 59.6 billion
All these facts provide good food for thought. It is quite possible that tomorrow we will wake up in a completely new world, in which a new financial system will operate, “at the helm” of which will be completely different countries.
If this happens, you probably would like your savings not to lose their value overnight due to the devaluation of a particular currency. The surest way to avoid this is to invest at least some of your savings in physical precious metals.
If you’re interested in learning more about investement in gold and are considering investing, Visit Regal assets and get your Free Gold Kit and learn all you need to know about investing in gold.
