Russia Dumps Half Of U.S. Treasury Holdings – Continues To Buy Gold

Written by Chris Marcus for the Miles Franklin blog

In a speech in early May, Russian President Vladimir Putin harshly warned about breaking away from the U.S. dollar. Now as April Treasury data has been released, it turns out that he wasn’t just making threats.

According to Bloomberg:

Although investors usually seek safety in U.S. debt, Russia cut its holdings of Treasuries nearly in half in April as Washington slapped the harshest sanctions to date on a selection of Russian companies and individuals.

While anytime news like this is released there’s still an element of shock that it actually occurred, it certainly was not without warning. As when Putin was speaking shortly after his recent inauguration, he discussed his policy views on the dollar.

“Now in regard to the notion that we should break away from the dollar.

I agree in general, this is not merely a separation from the dollar. This refers to the strengthening of our economic sovereignty.

And this is absolutely right.

Putin also mentioned how “the whole world can see that the dollar’s monopoly is precarious and dangerous for many,” and that “our gold and currency reserves are being diversified, and we’ll continue to do that further.”

Leaving aside feelings of whether Putin may or may not be “right” or “justified”, it seems as if there is little mystery as to how he actually feels about it himself. And given his power as Russian head decision-maker, while the U.S. may or may not agree with what he’s saying, it appears as if he’s putting financial actions behind his statements.

Also of note is how Russia continues to buy gold.

By contrast, the central bank keeps adding to its gold hoard, bringing the share of bullion in its international reserves to the highest of President Vladimir Putin’s 18 years in power.

As the news continues to develop, I find myself often feeling shocked and stunned at the stories I am reading each day. Because again, on one hand the developments have clearly been building towards these types of outcomes. Yet to see the global news on a daily basis with the acceleration of anti-dollar actions being taken, it’s amazing to see things finally happening so quickly.

Russia is another big customer in the market not just talking about being fed up with the dollar. But actually doing something about it and walking away. While buying gold.

Many other nations have repatriated their gold this year. And China has been continuing to buy gold while reducing its dependence on U.S. dollar infrastructure as well.

So just like there were signs leading up to the collapse of the subprime housing bubble a decade ago, the signs of what’s happening now are there for those who choose to look.

Now Russia can officially be added to the list of nations that are selling U.S. paper and buying gold. Which in my opinion only strengthens the case to do so on a personal sovereign level as well.

–Chris Marcus

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