Move Out of Treasuries and into Gold Continues

The Move Out of Treasuries and into Gold Continues

The comments below are an edited and abridged synopsis of an article by Andy Hoffman

For any nation that’s holding a large US Treasury position, there’s an incentive to move first in order to avoid being left without a chair when the music stops.

Japan, China and Germany have all dumped US Treasury holdings, with a few other notable sellers.

In addition, the effort to develop trade infrastructure that allows foreign nations to circumvent the dollar system has continued.

Moscow and Ankara may circumvent the US dollar amid an exploding currency crisis and trade directly with each other using the Russian ruble and Turkish lira, both of which have been crushed under the weight of US sanctions.

Both Presidents Putin (Russia) and Erdoğan (Turkey) are frustrated with US political and monetary policy. Given a new round of sanctions on each nation by the US, the foreign response is to walk away from dollar infrastructure.

Since Turkey is now facing its own currency crisis, its citizens are turning to gold.

The 90-day average daily volume of gold contracts more than doubled to 40,000, from about 17,000 in March. During the same time, the value of an ounce of gold in lira rocketed more than 30%.

The Turkish central bank repatriated its gold earlier this year, and there have been reports that Turkey has been adding to its gold holdings.

None of this is surprising; the signs indicate that the move out of US paper assets and into precious metals may be at hand.