Towards the end of 2014, you will recall that I discussed a nasty rumor started by SocGen, in which they stated that Russia was dishoarding its gold reserves and moving out of its positions.
As is typical, when any negative news surfaces in regards to precious metals, the mainstream media ran with it and a flurry of reports were released, backing the rumor.
This rumor not only turned out to be utterly false, as Russian officials didn’t sell any gold, but did the exact opposite. They increased their strategic gold reserves. Yet, it turns out that it doesn’t stop there.
IMF data now shows why the mainstream media was so desperate to display gold in such a negative light. Russia was funding their purchases of gold, not with rubles, but US dollars.
In fact, Russia sold a staggering $22 billion worth of its US treasuries, approximately 20% of its reserves, bringing their holdings down to $86 billion in December. The lowest level since June 2008!
Russia has not hidden the fact that they would like to see the US dollar replaced by a new reserve currency. This has brought a lot of scrutiny and opposition from Western officials as they struggle to maintain the current power structure. A power structure in which they currently dominate, yet are rapidly losing control of.
Data shows that Russia is not alone. Chinese officials also sold $6 billion of US treasuries and Japan an additional $10 billion.
At the moment, these actions appear to be having little effect, as the US dollar is on a one way path up. However, steadily and surely, Western central bankers are having less and less influence in the world.
The world desperately needs an alternative to the fragile fiat system that currently exist. It needs a resurrection of the gold standard or an alternative hard money system. Only with this, can sanity and discipline return to the markets.
