Governments and Investors take Refuge in Physical Gold

ArticleChange of moneyJune 25, 2018 - 6:54:57 AM

Governments and Investors choose to invest in Physical Gold ; Russia achieves its goal: OPEC agrees to increase oil production ; Greece benefits from "historic" debt relief agreement.

Governments and Investors are turning to Physical Gold

”In addition to the current geopolitical conflicts the world is facing a currency war and the only real refuge against the crash of the US dollar is physical gold," said a precious metals analyst at RT.

“European countries are not the only ones to repatriate their American gold stocks in their own vaults. The trend seems to be spreading and central banks around the world are doing the same" says Claudio Grass, precious metals advisor.

The world is still suffering the consequences of 2008 and the major problems of our world economy are still unresolved; on the contrary, the risks have become serious than they were ten years ago," Grass said.

More than 65% of the world banking system's monetary reserve is in USD. Therefore, holding physical gold is certainly the best possible hedge against a crash of any paper currency.

Global debt has risen to $230 trillion, while the global economy has remained frozen in a system based on debt and leverage.

The last major geopolitical change, which began with the First World War and ended with the Second World War, brought the United States to a dominant global position. They owned and stored 70% of the world's gold reserves. This is also the main reason why the dollar has become the world's reserve currency. "»

Over the past 30 years, we have seen a shift in geopolitical power from the West to the East. However the rules of the game are not very different and once again the possession of physical gold plays a major or even decisive role in the international chessboard.

Russia meets target: OPEC agrees to Raise Oil Production

OPEC, Russia and non-member allies have agreed to increase oil production by one million barrels a day. A victory for Saudi Arabia and Russia, which had pushed to increase production in order to reduce prices.

Saudi Energy Minister Khalid Al-Falih said an agreement has been reached to increase oil production to one million barrels per day (bpd). In reality, production will only increase by 700,000 b/d, as some OPEC members are not in a position to increase production at this time.

Following the news, the price of oil jumped to $74.69 a barrel (+$1.65), while West Texas Intermediate gained +$2, trading at $67.53.

Iran, OPEC's third largest producer, first opposed the agreement because the country is facing US sanctions that are crippling its exports.

The agreement should help to increase supply on the oil market without creating oversupply. "The actual increase in production can easily be absorbed by the market," said Harry Tchilinguirian, Head of Oil Strategy at French bank BNP Paribas, at Reuters.

Greece Benefits from a "Historical" Debt Relief Agreement

Eurozone countries have agreed a Greek debt relief agreement. Athens has more time to repay the €96.9 billion in loans and has an extended grace period during which the country will pay little or no interest.

As part of the agreement, euro area governments are also providing Greece with a final €15 billion loan to help it pay its bill, according toBBC.

The Greek economy has subsequently stabilised, but it still faces the problem of paying its debt, which amounts to about 180% of GDP.

The International Monetary Fund (IMF), which did not participate in the third rescue plan, encouraged debt relief, but nevertheless expressed serious concern about the long-term situation, as well as the fragility of the Greek economy.


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