by Alasdair Macleod, Gold Money:
The Russians came up with an extraordinary statement recently, central to why Russia and China are buying gold, the importance of which was missed by the media. President Putin said that “Russia and China need to secure their gold and foreign reserves.” He may have been overstepping the mark in making comments about China’s monetary policy, but he was unlikely to have done so without good reason. Furthermore it is impossible to secure foreign currency reserves, because they are at all times under the control of the issuing central banks. So what Putin was actually implying was that China and Russia need to secure their gold.
For those of us that follow these issues closely the emphasis on gold comes as no surprise. The reason this particular penny has not dropped in western markets is we do not think like they do. They emerged from failed communism based on Marxian creed. Keynesian and monetarist theories developed while most of Asia was in economic isolation, and is based less on Marx and more on Christianity. This means the Russians and Chinese have not automatically adopted western economic theory in the wake of communism’s collapse: parts of it, yes, wholesale no.
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