Why are Russia & China Buying So Much Gold?
Three Major Reasons Why You Should Too
2019 has been a very active year for the People's Bank of China and Russia's Central Bank. Since December 2018, China has added over 100 tons of gold to its reserves, while Russia has purchased over 106 tons during the same period.
This steady string of gold buying by both countries has helped to propel the price of gold to its highest level in more than six years.
Why are Russian and Chinese banks on a buying spree? Well, according to Euro Pacific Capital CEO Peter Schiff, "they can read the writing on the wall." Both countries are "preparing or the world where the dollar is no longer the reserve currency."
China's gold purchases come as it has moved away from buying US Treasurys amid the US-China trade war. China is now trailing behind Japan as the world's largest holder of US debt.
Russian gold holdings have increased by over 400% over the past ten years as Russia continues to make good on its promise to loosen the US dollars' influence on its economy.
The prolonged trade war and growing uncertainty about the health of the global economy have helped push the price of gold to its highest level in six years, up almost 18% in 2019. Gold hit $1,550/oz for the first time since April 2013.
The Three Major Reasons Why Everyone Should Own Precious Metals
Everyone investor should diversify a portion of their portfolio among different asset classes. It is essential to include assets in your portfolio that are not correlated. If your portfolio is too heavy in one type of asset (stocks, bonds, real estate, etc.), you may want to consider adding an asset like gold and silver that would offer you an 'insurance policy' should your other investments begin to decline in value.
Your portfolio should consist of products that move at a different rhythm than your other investments. Too much of one investment can often be a bad thing.
Many experts believe that the US dollar is heading for a significant decline in value. This most recent gold buying spree by China and Russia in an attempt to move away from the US dollar is just one example of a worldwide push to move away from the dollar. As more governments continue to flood the market with their unwanted US dollars, the purchasing power of the dollar will continue to decline.
As a currency weakens, the value of gold and silver tend to rise. This rise in the value of gold and silver can protect purchasing power during inflationary periods.
The Stock Markets Best Days Have Passed
For investors expecting a robust fourth-quarter earnings season to drive stocks out of this malaise could be in for a disappointment. Many companies have been trying to temper investors' expectations ahead of potentially disappointing earnings reports.
In recent months, analysts have lowered their earnings expectations of all 11 sectors of the S&P 500 - from energy to technology. Data from just one week ago showed domestic factory activity hitting a 10-year low in September, while the services sector expanded at the slowest pace in three years.
The Bottom Line
Gold & silver tend to shine when most other investments lose their luster. I would agree that the stock market has performed beyond most people's expectations over the last ten years. But nothing lasts forever.
I hope that everyone has been able to profit from what the markets have done. But, we need to know when to cash in our chips and leave the casino. Sometimes, we need a push or a sign to let us know when it's time to stand up.
Precious metals have been patiently waiting for their turn to perform. Despite a lack of mainstream media coverage, gold has quietly gained over 25% over the past twelve months and silver has increased by just over 21% during the same period. As of today, the Dow Jones is negative for the same twelve month period!
Taking advantage of the low prices of gold and silver right now is the opportunity that many investors have been waiting for. Imagine what the price of gold and silver could do if we see a substantial pullback in the markets. The last time we saw a major correction in the markets, the price of gold increased by over 300%, and silver jumped nearly 600%.
The good news is that you still have time to invest in gold and silver. I highly recommend that you consider the role precious metals could play in securing and growing your savings and retirement.
Call the Oxford Gold Group today and learn as much as you can about investing in precious metals and the benefits of working with the Oxford Gold Group.
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