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Russia Joins Dollar Interventionists, Shifts Position Diametrically As It Now Plans To Buy Gold

Tyler Durden's picture




 

As Zero Hedge speculated recently, the latest participant on the gold bandwagon is now officially Russia, which last month was said to be considering a sale of up to 25 tons of gold. That posturing did not last too long. Not only that, but Russia is now also actively participating in the dollar intervention market, buying more than $1 billion of dollars to keep the ruble low. Due to moderating inflation and a rapidly appreciating ruble, the country is now considering diversification in the same way that India and China presumable are: by shifting into dollars. Look for much more upside pressure on Gold as more and more countries become disgusted with the way Bernanke is treating both American's citizens and the country's currency. Reuters reporting:

Russia's central bank does not
exclude further rate cuts before the end of 2009 and may buy
gold from the state repository
, Gokhran, the bank's first deputy
chairman, Alexei Ulyukayev, said on Monday.

"We will buy (gold) only if conditions are adequate,"
Ulyukayev told reporters.

 

Last month, Russian media reported that the government
planned to sell 25 tonnes of gold, possibly on the local market,
from the repository.

 

Separately, Ulyukayev said the central bank has bought more
than $1 billion in November on the foreign exchange market to
cap the appreciation of the rouble.

 

The vast majority of the purchases came on Monday amid
increased interest from investors in the rouble and its
instruments, pressuring the Russian currency to firm further.

And as for the most stinging critique of Bernanke's attempt to force the US taxpayer to become the only holder of MBS in the world, the first deputy chairman of Russia's Central Bank had this to say of just how much credibility the rest of the world has in the Fed's balance sheet (which now soon will consist almost 50% of MBS and Agencies).

Ulyukayev also said the central bank had no plans to invest
again in U.S. mortgage agency bonds.

"We have fully exited from them and we have no plans to go
back," Ulyukayev said.

One by one, Bernanke is managing to alienate every foreign Central Bank.

 

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Mon, 11/09/2009 - 11:47 | 124631 Altan311
Altan311's picture

One wonders when exactly the line will be drawn in the sand. Perhaps there is some predetermined level of weakness the dollar will be allowed to fall to before the suckers rally crashes? We bounced off 75 on dixie today (the/dx).

Mon, 11/09/2009 - 12:04 | 124653 ghostfaceinvestah
ghostfaceinvestah's picture

Surprise, surprise, no plans to buy agency bonds.

Who would (other than a money-printer)?  These guys have no faith and credit backing of the government.  Who's to say they next guy in office in 2012 (assuming we even have an election) will support these guys?

Not that I needed more proof, but just further evidence that Zimbabwe Ben will be buying agency MBS well into 2011.

Mon, 11/09/2009 - 12:05 | 124657 Moe Speeks
Moe Speeks's picture

gold gold gold

higher higher higher

Mon, 11/09/2009 - 12:17 | 124662 Daedal
Daedal's picture

Those that think the dollar can just continue its slide with the only byproduct of having negative correlation with asset prices are overlooking a critical point.

With all this focus on Gold, we should not overlook the effect dollar weakness has on commodities in general, like oil, and the subsequent cost increases for operating businesses, the decrease in discretionary income for consumers, and the subsequent reduction profit margins for business stemming from cost increases and decreased revenue streams.

We saw the effect $4/gallon gas prices had on consumers last year. Now, with 10.2% unemployment, it won't take nearly as much to stir the economic nest.

Bernanke and the Gang should be much more concerned about oil prices, because consumers (aka voters) will experience the impact immediately when they fill up at the gas station or go shopping at Walmart. Gold, while contextually important, is only a barometer for what's going on. The breaking point (in the economy and subsequently stock market) will more likely come from impact on consumers stemming from commodities that are consumed.

Mon, 11/09/2009 - 12:17 | 124675 ghostfaceinvestah
ghostfaceinvestah's picture

Bernanke knows full well that his dollar destruction is driving up commodities prices.  In fact, this is what he WANTS to happen.  He believes that rising commodities prices will help bring about inflation, or at least offset deflation.  This is all according to plan.

Sure, it will kill the middle class, and he knows this, but doesn't really care.  He isn't owned by the middle class.

Mon, 11/09/2009 - 12:43 | 124716 Gubbmint Cheese
Gubbmint Cheese's picture

ghostie.. So 1200 on the S&P and $2000 on gold.. I agree.. but what about the end game? This cant end happily ever after (imho) but what is the trigger to restart the focus BACK to risk aversion? if you want.. ping me at loverofhamatgmail.. cheers! gc

Mon, 11/09/2009 - 12:33 | 124700 Anonymous
Mon, 11/09/2009 - 12:45 | 124719 ghostfaceinvestah
ghostfaceinvestah's picture

No question the money printing since March 18th has made unemployment worse than it otherwise would have been.

Imagine the "stimulus" if gas had stayed below $2 a gallon (or even fallen to the $1.50 mark?).  Not just on pump prices, but on transport, food prices, etc?

Continued money printing will only make things worse at this point.  I can see 12% U3 easily.

Mon, 11/09/2009 - 13:22 | 124769 Anonymous
Anonymous's picture

I concur, Daedal. I've been dumping all my savings into precious metals all year, but this gold price cheerleading I think is distracting from the far more serious reality of rising commodity prices (especially oil). The value of any currency, paper or metal or whatever, lies in the society's ability to produce goods and services for those tokens.

Many are chanting "bring it down!" from the lobby of the building. People who think they are ultimately going to profit from this very grave situation we find ourselves in solely by sitting on the right investments are in for a whole lot shock and pain.

Mon, 11/09/2009 - 15:50 | 124981 faustian bargain
faustian bargain's picture

Dude. I can't speak for everyone else in the lobby, but for me personally, I'm not expecting to profit from diddly. I just want the failed fiat system to end in the most spectacularly revealing manner possible, so that the world of sheep will finally have the wool removed from their eyes, and get back to sound money.

There will be a lot more pain, sooner or later, and I think most people here realize it. Trying to prop up a worthless dollar is not going to help one bit.

Mon, 11/09/2009 - 12:11 | 124667 Anonymous
Anonymous's picture

good job zero hedge. you have finally started pumping your own ad dollars by publishing story after story about shit dollars and high gold. This, of course, scares people to buy physical via your conveniently placed goldline ads.

and you say the MSM are the only ones that manipulate their audience. but hey, business is business so no worries.

Mon, 11/09/2009 - 12:31 | 124696 Tyler Durden
Tyler Durden's picture

You are absolutely correct. We have singlehandedly taken over Google and changed the adsense contextual ad algorithm to benefit us and us alone. You have uncovered our top secret ploy.

Mon, 11/09/2009 - 12:38 | 124709 Anonymous
Anonymous's picture

So you're saying that you have NO control over who advertises on your site? I doubt that.

Mon, 11/09/2009 - 12:42 | 124714 Anonymous
Anonymous's picture

Damn, you guys are sneaky. I bet Tyler Durden is really Timmy G.

Mon, 11/09/2009 - 12:43 | 124715 Josey Wales
Josey Wales's picture

Is that why I've been wanting to buy more gold?  I thought it was the blowup of Kenyesian bull crap!  I mean, that's why I bought all my PM investments in 2005 but I guess it is all because of the adds you've tricked google into putting on the site!  Tricky Tricky!

Mon, 11/09/2009 - 12:47 | 124724 ghostfaceinvestah
ghostfaceinvestah's picture

Yeah, I guess that $1.25T of MBS money Bernanke is printing has nothing at all to do with the falling USD, compared to the few grand month TD takes in on ad money

Mon, 11/09/2009 - 12:51 | 124728 spekulatn
spekulatn's picture

"Down goes Frasier! Down goes Frasier..."

 

 

"MARK IT ZERO, DUDE"

 

 

 

Mon, 11/09/2009 - 16:43 | 125055 hack3434
hack3434's picture

Don't you people know?!? Google IS Skynet....run!!

Mon, 11/09/2009 - 12:14 | 124673 buzzsaw99
buzzsaw99's picture

They are buying dollars because they are disgusted with the dollar? Ha! It is a globalist pig man conspiracy, if you don't understand that you understand nothing.

Mon, 11/09/2009 - 12:19 | 124678 RobotTrader
RobotTrader's picture

Mon, 11/09/2009 - 12:37 | 124707 curbyourrisk
curbyourrisk's picture

So...if we allienate all the central banks...will we still need ours?

Mon, 11/09/2009 - 14:13 | 124835 orca
orca's picture

You don't have a central bank, that is the whole problem. Yes your prez can appoint the head honcho but that's about all the influence the politicians have over FED policy. The world is finally waking up to that fact and it will be the end of the USD as the reserve currency of choice.
Because there is no ready alternative yet (EUR is not yet 10 years old and unproven in an inter-EU crisis) the only alternative is gold. Except for the traders a rotation into gold (and other PM) is a stoploss move for all the other central banks.

Mon, 11/09/2009 - 12:37 | 124708 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

I wish we'd step away from all the gold articles for a day or two before this site gets a rep as a "gold bug" site.

Still, I know, I know. GOLD.

Mon, 11/09/2009 - 12:46 | 124721 BobPaulson
BobPaulson's picture

Tempted to agree, but I'm not seeing 100% James Turk-like articles here, and the Gold story does really have a big impact right now on when this game of Ben's meets its maker.

Mon, 11/09/2009 - 13:41 | 124796 chumbawamba
chumbawamba's picture

GOLD BITCHES!!!

I am Chumbawamba.

Mon, 11/09/2009 - 12:45 | 124718 Assetman
Assetman's picture

My only consolation from this is buying a Prius this year.

Yeah... I know... some consolation.

Mon, 11/09/2009 - 13:38 | 124792 Lugnut
Lugnut's picture

I think the word you were looking for was 'punishment', not 'consolation'

Mon, 11/09/2009 - 20:19 | 125299 Anonymous
Anonymous's picture

While all the rich guys ride around in Limos and fly on private jets.

Mon, 11/09/2009 - 12:53 | 124731 SilverIsKing
SilverIsKing's picture

Geithner: "We believe in a strong U.S. Dollar."

Nice job Timbo!

Mon, 11/09/2009 - 13:27 | 124780 FreddyInBangkok
FreddyInBangkok's picture

This morning Greystar +24% Gold Port +20% (McEwen) ECU 11% (latecomer) Guyana 9% (McEwen)

Mon, 11/09/2009 - 13:49 | 124807 Anonymous
Anonymous's picture

I believe in the fucking tooth fairy Timmy but somehow I can't get a job as a dentist. Who did you blow to get your gig?

Mon, 11/09/2009 - 13:59 | 124817 Anonymous
Anonymous's picture

Everyone was concentrating on Ben buy a few hundred billion in Treasuries, when the real story was (is) the buying of over a trillion in MBS and agencies. Think Russia was one of their customers? How about the Arabs and Chinese? As in "You bail us out of this shit, or we start dumping Treasuries." Now that the foreigners are more liquid, they will buy up "things". They certainly don't want dollars, though dollars are better than MBS, or CMBS.

Mon, 11/09/2009 - 14:26 | 124859 J.B. Books
J.B. Books's picture

The word went out by the powers that be.  Buy dollars or the dollars you hold will become worthless.  The "Top" is getting close in gold.   When the big turn comes I expect gold to drop as countries try to save the dollar (and their dollar reserves) by selling their gold reserves.

I won't be wronged, I won't be insulted, and I won't be laid a hand on. I don't do these things to other people, and I require the same from them.

Books 

Mon, 11/09/2009 - 16:44 | 125056 Anonymous
Anonymous's picture

When they sell, I'll be buying.
**rubs hands together in anticipation**

Tue, 11/10/2009 - 01:27 | 125569 Spitzer
Spitzer's picture

hahaha, cetral banks can print money if they need it, they don't need to sell gold. That would be like the Saudis trading oil for sand.

Mon, 11/09/2009 - 14:42 | 124878 Anonymous
Anonymous's picture

Then again, they responded to that some months ago JB... When the Fed decided to ramp up printing last Thursday the die was cast, have a look at the currency markets -even the pound is sliding up!? Look at Gold this weekend.. what do think this is, a short term hedge?

Mon, 11/09/2009 - 14:53 | 124896 Gilgamesh
Gilgamesh's picture

As expected, and forecast by many (including Harvey; emphasis added):

Oct 22

http://harveyorgan.blogspot.com/2009/10/oct-2209-commentary.html

This next news story is quite interesting.  In the Russian newspapers, Gokrhan , an official holder of gold, palladium, platinum and diamonds for the Russian central authorities announced that it might sell 45 tonnes of gold:

...(story omitted)...

The Russians are the most savvy investors known.  They are gold lovers and wish to participate with China in a new currency backed by gold.

Russia is not stupid.  Do you think that they would announce that they were going to sell gold and then do so in similar fashion as the stupid British Government?

Not a chance.  Consider this is an official announcement that Russia is in the market to PURCHASE  gold.

On a side issue:  have you noticed that there is no word on the sale of the 403 tonnes of IMF gold.  Do you know why?  Because the Chinese were informed that the gold is gone or encumbered.

Mon, 11/09/2009 - 15:46 | 124977 Josey Wales
Josey Wales's picture

200 tonnes went to india.  It was in a few papers last week.

Mon, 11/09/2009 - 16:53 | 125069 Gilgamesh
Gilgamesh's picture

Please note the date of that reprint.

Mon, 11/09/2009 - 16:27 | 125029 brandy night rocks
brandy night rocks's picture

The Russians are the most savvy investors known.

 

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