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I think it was all the way back to 2004 that a picture circulated on the internet of President Putin holding a 400 ounce gold bar.  It was not this particular picture but one similar to it.  I can remember thinking “this picture is not circulating by chance.”  Just as our politicians do “photo ops” here in the States, the “chess playing” Mr. Putin took the opportunity then (and several times since then) to do a photo op either holding a gold bar or standing in a vault surrounded by gold.  Why do you suppose that is?

We also know that China has amassed at a minimum close to 5,000 tons of gold over just the last 10 years.  They announced holdings of 1,054 tons back in 2008 or ’09 and have kept production of 400 tons per year and imported at least 500 tons per year (on pace this year for 2,000 tons!) for at least 4 years.  This 3,500 tons (at least) added to 1,054 tons comes out to close to 5,000 tons.  They have had quite an appetite, why do you suppose that is?

We also know that China has been circling the globe “spending money” to tie up and guarantee the future supply of raw resources.  They have “paid” for deals using dollars.  Their deals have been structured to pay with either future dollars or “current” dollars in the form of U.S. Treasury securities.  They export no gold whatsoever and have not as far as I know ever done a deal where they “pay” or settle in gold… Why do you suppose that is?

Before going into a brief explanation I will give you the answer, BECAUSE THEY KNOW!

They not only “know,” they have known for a long time.  Longer than most of the people reading this have even been alive.  I believe going all the way back to Lenin and Marx, the Russians have known that the best way to defeat an enemy is to either debase or help debase your adversary’s currency.  Heck, we once upon a time even knew this as evidenced by the North counterfeiting Confederate dollars into oblivion.  And the Chinese?  They invented “paper fiat” currency and have blown up more than you can count, if anyone knows what the dangers (Achilles heel) are to a paper currency…they surely do!

That said, please don’t get ticked and think that I’m some “Red Communist” flag waving sympathizer because I’m not.  All I am saying is that Westerners think short term and have short term memories while Easterners think long (really long) term and have memories that have passed down over hundreds of years.  The Panama Canal and Hong Kong are perfect examples.  We gave a 99 year lease which at the time was thought to be a “forever lease” in our eyes…but guess what?  The clock ran out and China now has them both by doing what?  NOTHING other than sitting on their hands.  I am sure that when the deals were struck that the Chinese were looked at as some pre historic caveman idiots who didn’t know what they were doing…but were they really?

Oh, and let’s not forget about the Indians, they have bought gold and silver forever.  How “barbaric” or stupid will they look when the banking system comes down?  They have amassed more gold within their borders than any other country, were they dumb or were they smart?  I guess that time (not very much) will tell.

Please understand that nothing on a global scale ever happens by coincidence and that countries ALWAYS do what they believe to be in their own best interests.  The West has a monetary system that served them well for a long time.  It was such “a good deal” that it became abused and “money” became created out of thin air without any work.  This is a great job…if you can get away with it and “keep your job.” The problem is that the rest of the world has (had many years ago) figured out what we were doing.  Did they jump up and down screaming “that’s not fair?”  No, (well maybe a little grumbling) they bided their time, waited us out and bought gold as SAVINGS…as real CAPITAL that would be there when needed and could not be debased by fashionable financial rocket scientists!

I will finish with a question.  If you could “have a job” that afforded you all sorts of power and perks AND you didn’t have to put out any effort at all…Would you do or say anything in order to keep that job?  This is why for your entire life you’ve been told that gold and silver are “scary, volatile, barbaric relics of the past and that only lunatics would buy any”…because it takes “work,” real capital, machinery and labor to produce.  This is also “why” foreigners from all over the globe are buying metal faster than it can be produced…because “they know and have known all along.”

P.S.  The Chinese, Russians, Indians and Arabs put the “bottom in” in gold back in late June.