G&G Associates Tax & Financial Consulting
Who Do You Trust: Someone Buying Gold or Printing Dollars?
Dear G&G Readers
Two weeks ago, the biggest purchase of gold in the history of mankind was made.
India’s Reserve Bank (RBI) just bought 200 tons of gold from the International Monetary Fund (IMF).
To give you some perspective on how much 200 tons really is, imagine 45 full-grown elephants balancing on a scale. That would just equal the amount of gold that India bought two weeks ago.
But what made this story even more striking was the Reserve Bank of India did NOT purchase this gold with dollars. They negotiated to buy this gold in SDRs (or “strategic drawing rights,” IMF’s version of a synthetic currency used for transactions).
Naturally, the media spin-doctors here in the U.S. were out in full force when this news broke. They made light of the fact that this was the largest single sale of gold that’s ever happened outside the U.S. dollar.
The misguided media types were even telling the world that India was actually helping the U.S. dollar by not buying gold in dollars. According to the media dolts, the Reserve Bank of India was in fact “saving the dollars in their reserves for a rainy day.”
(But of course, G&G readers will not buy that malarkey…right!)
So why am I telling you this today? Well, apparently the IMF has a total of 400 tons of gold to sell. And India is still interested in buying. Today, I want to tell you what that means for all of you dear readers still getting your paychecks in dollars.
But first, let’s gather around for Round two of this story!
Ding! Round Two of the Biggest Gold Story in History
Bloomberg is now reporting that the Reserve Bank of India has offered to buy the rest of IMF’s gold. So India has raised its hand to buy the entire 400 tons of IMF gold.
The purchase of the 2nd 200 tons is not finalized yet. But if this sale goes through, India will own the 8th largest gold reserve in the world. Of course, this is just another indication India is rapidly gaining strength.
You can add another 45 elephants to your mental scale. That’s a crowded room of elephants, I’d say!
Long-term this has incredible implications for both the dollar and gold. It further proves what I’ve been saying all along. We’re on the cusp of a major shift for both the dollar and gold prices in the years to come.
All the world’s leaders acknowledge it and are making strategic plans to diversify away from the U.S. dollar.
Folks…You can't defend the dollar – but, make sure you can defend yourself.
Let’s look now look at China. China is taking a bath on its U.S. investments – losing as much as $270 billion a year. So they're picking up their marbles and heading home. And when America's largest financial backer leaves the table, rest assured it will be bad news for the dollar.
Why should you care?
Because a weaker U.S. dollar hits you squarely in the wallet. It means HIGHER costs everywhere... Soaring gas prices, mortgage rates and food costs for starters. Slashed purchasing power. A “cat food” standard of living.
You can't control the fate of the dollar. But you can take charge of what happens to your wealth.
Find out what you can do to protect yourself by becoming a GGIS Society member. Right now with a 50% membership discount… you need to sign up today?
SO, Who Do You Trust? Someone Buying Gold or Printing Dollars?
Also, this is amazing news that a central bank from an emerging market (and not one of the G-7 nations) is now addressing the touchy issue of reserve diversification in such an open and transparent manner – especially while all the U.S. officials continue to hide behind smoke and mirrors.
On one side you have the Reserve Bank of India making its intent clear by publically announcing the purchase of the 1st and now possibly 2nd 200 Tons in SDRs. (And coincidentally also publically denouncing the U.S. dollar in the process.)
On the other side of the fence, we have the Federal Reserve, who continues to print money like there’s no tomorrow and devalue our dollars. More importantly, they don’t want us to know exactly how they’re doing it.
I was appalled when I read that our beloved and revered Dr. Bernanke is advocating that we do NOT audit the Fed’s dealings. He just wrote a newspaper column for the Washington Post saying:
“These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States.”
In a nutshell, Dr Bernanke wrote this column to ask the public not to investigate the workings of the Federal Reserve. It will "hurt" the global recovery process.
I shudder to think what the Fed has been orchestrating that they do not want us to know. I feel this is about as close to a confession we will get from the Fed regarding any wrong doing.
Reminds me of that famous Jack Nicholson quote from “A Few Good Men”- “You can’t handle the truth!”
It Doesn’t Take a Rocket Scientist to See Who Will Come Out On Top
Coming back to the contrast between the Fed and India’s Central Bank…
In short, we have the Reserve Bank of India making global public announcements of their intentions. They are making speeches about how they operate, of how they measure and use benchmarks. They do this so the public can have all the confidence it will need in its leaders to protect its wealth.
And we have the Fed pleading their case to make the public not look at its internal workings.
Frankly, Dr. Bernanke should be scaring the shigidy out of you with his cryptic editorial pieces. That’s not how I visualize a central banker instilling confidence to the masses.
It does not take a rocket scientist to see which kind of central bank will help a country and which will lead the country to ruins.
Frankly, if you have dollars in your savings account, retirement fund or any long-term wealth plan, I encourage you to follow India’s lead and start diversifying now.
Stay long India and short the Fed and the dollar!
So, what are you going to do? I can only lead you to the water, but I can’t make you drink it.
BUT if you're ready to "make some changes," then here's your chance.
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Tax & Financial Consultant, RFC
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"Not to know is bad, not to want to know is worst"
LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. Also, please note that due to our commercial relationship with Public Gold, G&G Associates may receive compensation from a membership purchased at www.publicgold.com/gngpreciousmetals.