India has rapidly stacked up its gold-denominated assets, which are currently worth $57.6 billion, or 30% more than they were during the same period in 2023. New Delhi purchased some 19 tons of gold in the first quarter of 2024 alone, for a total of 841 tons.
Apparently learning lessons from Venezuela, Russia and Libya’s sour experiences relating to the risks of storing central bank assets in foreign countries, India recently moved about 100 tons of its gold reserves from Britain back home to domestic vaults.
US Federal Reserve Chairman Jerome Powell repeated his long-running warning about USA debt levels being unsustainable at a European forum on central banking last month.
In February, El Salvadoran President Nayib Bukele warned that the Fed strategy of printing money out of thin air amounts to a bubble that will inevitably burst.
Central banks’ holdings of dollar-denominated assets have reached a historic low, driven by Washington’s attempts to lock resource-rich Russia out of the dollar-based global financial system.
This has led developing countries to seek refuge in gold as an asset whose value and convertibility isn’t tied to the whims of any one nation and therefore cannot be as easily weaponized.
IMF estimates from the spring cited by Japanese financial newspaper Nikkei in a recent report show that dollar and US Treasury-denominated foreign reserves have hit to 58.9% in 2024, down from about 70% two decades ago.
However, reserves denominated in China’s yuan have also dropped, from about 3% of total foreign reserve holdings in early 2022 to roughly 2% today, with Ukraine, Norway, Brazil, Switzerland and Israel leading the way in drawing down their yuan holdings.
A World Gold Council survey published in June calculated that central banks’ purchase of the precious metal topped 1,037 tons in 2023 – the second-highest annual buy-up in history after purchases in 2022, which amounted to 1,082 tons.
China has led the bullion buy-up, adding gold to its reserves for 18 consecutive months from November 2022 onward, increasing them by 16.3%, to about 2,264 tons total as of June, 2024.
Nikkei cites the ongoing conflicts in Ukraine and the Middle East, which show no signs of stopping anytime soon, to continue dumping dollars and other fiat currencies and stacking up their gold holdings instead.
Also the geopolitical risk of a second Trump term as president and a potential escalation of USA-China tensions as factors which are likely to drive central banks into dumping more US dollars.
Not even those high taxes, higher than a lot of places in the world…are really funding the [US] government, El Salvadoran President Nayib Bukele said at a forum in Washington in February, 2024.
So, who’s financing the government? Government is financed by Treasury bonds, paper. And who buys the Treasury bonds? Mostly the Fed. And how does the Fed buy them? By printing money.
But what backing does the Fed have for that money being printed? The Treasury bonds themselves. So basically, you finance the government by printing money out of thin air. Paper backed with paper. A bubble that will inevitably burst.
The situation is even worse than it seems because if most Americans and the rest of the world were to become aware of this farce, confidence in the US currency would be lost.
Sputnik / ABC Flash Point News 2024.
Good move, before sanctions for cooperating with Russia are kicked in, and like Venezuela one does not get its own gold back!
America is able to sustain this because it controls its client states finances because of their use of the “not so almighty ” dollar and petro-dollar so in reality the western world and its eastern friends are paying the USA,s debt . Worthless bonds shuffle between two hands with a “promise to pay ” which if you know how the US takes but doesn’t give ( unless there is profit in it ) is not worth a dime . The UK spent decades paying back US “Lease/Lend to Britain in WW2 –we had to live on ration coupons for a… Read more »
The USA will implode for the inside, which has already started, as more and more people become unemployed living on food kitchen provided by famous Americans, and not the US government. Officially the dollar seized to exist in March 2023.
The US banking system is broken. That doesn’t portend more high-profile failures like Credit Suisse. The central banks will keep moribund institutions on life support. But the era of dollar-based reserves and floating exchange rates that began on August 15, 1971, when the US severed the link between the dollar and gold, is coming to an end. The pain will be transferred from the banks to the real economy, which will starve for credit. And the geopolitical consequences will be enormous. The seize-up of dollar credit will accelerate the shift to a multi-polar reserve system, with advantage to China’s RMB… Read more »
Its actually down to a promise when it comes to fiat money – who do you trust or what country does another country trust ?
America in all its actions betrays the trust of even its friends just to make a profit in other words pure GREED !!
The Yuan seems to be trusted by the BRICS countries as they are using it -even US monetary giants agree they have to fight against it before it becomes too powerful -it wont be accepted in the USA or client states but they aren’t the whole world.
The greatest danger to dollar hegemony and the strategic power that it imparts to Washington is not China’s ambition to expand the international role of the yuan.
This crisis is utterly unlike 2008, when banks levered up trillions of dollars of dodgy assets based on “liar’s loans” to homeowners. Fifteen years ago, the credit quality of the banking system was rotten and leverage was out of control.
I know the big US financial institutions bought up US mortgages and charged high prices that US citizens couldn’t afford now they are left with unsaleable homes made worse by the recession so its bounced back on them.
The Vietnam war bankrupted the USA and created the end of the gold link to the dollar and the new regime of floating exchange rates allowed the United States to run massive current account deficits by selling its assets to the world. In effect, the market worries that buying inflation protection from the US government is like passengers on the Titanic buying shipwreck insurance from the captain. The gold market is too big and diverse to manipulate. The dollar reserve system will go out not with a bang, but a whimper. The central banks will step in to prevent any… Read more »
Those countries took on US debt but now are lumbered with the dropping values -check out who really owns or controls those massive financial institutions -hint -who said -quote- ” I don’t care who rules a country as long as I control the money supply ” . From a foreign viewpoint the USA is actually controlled from abroad just like the UK I agree it forced Russia to be more independent in monetary transactions and supply of vital equipment and that Mr.Putin was a bit naive in his actions . From my point of view the UK is now suffering… Read more »
Wow, that is crazy, I guess the WEF is the one in control now, as a puppet to the real elite?
Yes Anonymous.