“Buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple”
And since it is this same political cycle that is doing everything in its power to preserve what little credibility it has, and to avoid its naked idiocy from being revealed for all to see, it has done everything in its power to push the price of gold lower.
However, several entities refuse to be fooled by such “cheap” tricks. One is China, whose ravenous apetite for gold has been extensively discussed previously.
The other is the Bank of Russia.
According to central bank data, Russia’s gold reserves rose to 40.1 million troy ounces as of May 1 compared with 39.8 million ounces a month earlier.
Russia increased its gold holdings for many months in a row last year, as shown by central bank figures and represented in the chart below.
So why is Russia engaging in this gold-buying spree when it likely has more immediately gratifying ways to spend its reserves?
The answer was given by Dmitry Tulin, who manages monetary policy at the central bank, was as concise, as sensible, and as lucid as that given by Bass.