Gold has a massive floor Russia and China Place Floor Under Gold Price

Returning briefly to China, China’s announcement comes just weeks after Russia announced it had doubled the ceiling on permitted gold holdings of its sovereign wealth fund, from 20% to 40%. This will create demand for perhaps 100 metric tonnes over the coming year. If China continues to add 30 metric tonnes or so to its reserves at the same time that Russia is out to buy 100 metric tonnes it will put a de facto floor under the gold price, while supporting the 20% rally in gold prices we’ve seen over the past few months. Russia and China could be acting in concert to send a message to the world that dollars are yesterday’s news, and gold is the new foundational reserve asset (as it was for centuries prior to 1971). We could be witnessing a critical turning point in the international monetary system. In short, Russia, China and the other nations I’ve mentioned are “weaponizing” gold as another weapon in the ongoing financial war that surrounds the war in Ukraine. Since Russia and China are among the top five gold producers in the world, they can buy gold from their own mines using local currency.