Russia, China, USA and Gold

I have spent a week ‘minding my own business’ this week and in that process, attracted some influential followers on my twitter account; lets see how that relationship develops.

So whats been going on in the metals market, well a lot as you can imagine; Gold & Silver have been volatile but have finished the week trending upwards, and long may they continue to do so.  This onward accent is in part due to the tense tripartite relationships between Russia, China and the USA.  You are no doubt aware of the relationship based on tolerance between the 2 old Cold War superpowers, and with the U.S ever increasing the pressure on Russia due to its ‘invasion’ of the Ukraine, has in avertedly introduced China as an economic and resource player in the war of economies.

Reported on Bloomberg Russia & China Deal, Russia is on the brink of signing a gas export deal with China, 30 years in the making.  Why is this relevant? Russia may be losing political favor in Europe especially in pro-U.S states because of the developing situation in the Ukraine.  Russia is therefore seeking to expand its gas customer base out side of Europe in order to sustain a long-term income for the future.  My assessment is that as the U.S develops its own Shale Gas refinement, it will increase the available supply of gas therefore limiting E.U states dependency on Russian gas; good news for Europe, bad news for Russia.  In a deal with China which may be signed as early as May, this bi-lateral trade agreement between Russia and China would support these Eastern states economic growth well into the next decade.

China is very distrustful of the U.S; in a up and coming U.S state visit to the far-East, China has already warned the U.S of its skepticism with U.S and Japanese meetings, indeed a high-profile Chinese General informed the U.S Secretary of State of the death of one of his uncles while in custody of the Japanese during WW2 (China Warning).  It seems the Chinese do not forget, and we should not discount the historical foundation of these countries.

What does this have to do with Gold?  You can’t look at any one single event in isolation; 4 weeks ago I blogged about Russian exposure to the U.S debt crisis (holding U.S Dollar reserves), 3 weeks ago, I blogged about China reducing its exposure to U.S debt, and now I’m telling you that both states are increasing their gold reserves like crazy.  Check out the Hong Kong Gold imports from 2001:

But I also quote from smaulgld.com ‘Russia is also increasing its Gold reserves.  China and Russia have been exchanging their U.S. dollar reserves for Gold ….Russia and China now rank in the top ten countries by Gold reserves:

The only support for currency in a global recession is the backing of Gold & Silver. So with a deteriorating relationship between Russia and the U.S, a strained relationship between China and the U.S; it makes perfect sense for the 2 Eastern states to collude and ensure the security and prosperity of themselves in amongst the global economic chaos caused by U.S sub-prime debt.

'Man is free the instant he wants to be'

Voltaire

...Although i'd amend that to be - 'Anybody can be free the instant they want to be'