Gold Is Up Because BRIC Countries Are Buying
Source: Seeking Alpha, Brandon Clay (11/30/09)
"This year's gold rush is a result of buying pressure from emerging market banks, not worried retirees buying coins."
Ambrose Evans-Pritchard recently discussed how emerging market countries are quietly buying gold en masse.
In the past six months, Russia, China and India moved part of their Western currency reserves into bullion. The shift was significant enough to push gold prices higher even as equity markets settled down. This year's gold rush is a result mainly of buying pressure from emerging market banks, not worried retirees buying coins.
So why is this important? The future of the global economy is in the East. Instead of multiple-trillion dollar debts, China, Russia, and India have currency reserves. These governments are slowly moving their reserves from fiat currencies like the dollar to more stable stores of value like gold. At the least, it’s a temporary sign that BRIC confidence is waning in the US government’s ability to pay off debt. They are, in essence, shorting the US economy and exploring other stores of value besides the dollar.
Maybe you should do the same.