NZZ: Russia, China and Turkey seeking the gold recovery from dollar hegemony

Russia, China and Turkey are actively buying gold to get rid of dollar dependence, says Neu Zürcher Zeitung. Thus, Moscow has hedged in the event of new sanctions by the US. Ankara largely solves its domestic economic problems with inflation. Beijing, however, poses a more global goal: to make the yuan a world currency.

NZZ: Россия, Китай и Турция ищут в золоте спасение от долларовой гегемонии США

ReutersС the beginning of this year the Russian Central Bank bought 128 tons of gold, increasing its reserves to 2240 tons, writes the Neu Zürcher Zeitung. The head of the Kremlin Vladimir Putin holds “de-dollarization”. And in this endeavor he is not alone. Similar processes occur in China and Turkey. Even the head of the European Commission Jean-Claude Juncker considers “absurd” that Europe is using American currency to pay for 80% of energy imports. In turn, the President of China, XI Jinping has repeatedly talked about the economic hegemony of the United States.

Unlike other currencies, stocks or bonds, gold is an asset that is not bound by the obligations with third parties, says the publication. Accordingly, the precious metal does not carry any credit risk. That is why gold is “an important component of anti-crisis policy of the autocrats from Russia, China and Turkey.” These countries are afraid of American currency, because she got in the world is very widespread. The dollar is used in 90% of international currency transactions, and almost always in the purchase or selling of oil. Two thirds world debt is denominated in dollars. The ubiquitous American money force other economies to adapt to the financial policy of Washington and fluctuations in the value of “green bucks”. In addition, the dominance of the dollar in global currency markets makes them vulnerable to economic sanctions of the United States. Washington can freeze the assets of any company or Bank, operating with American money. Russia began to defend against this in 2014, continues the Neu Zürcher Zeitung. The country has been under U.S. sanctions for five years and “realized their borders”. In Moscow scared of additional sanctions, in particular Russia off from the international payment system. For Putin financial sanctions Americans — the same serious threat as the military power of NATO, the newspaper writes. In addition, the head of the Kremlin wants to avoid at all costs a repetition of the situation with the Soviet Union, when, due to a sharp drop in oil prices to ex-Soviet President Mikhail Gorbachev had to take on the West billions of dollars in loans to buy food. In 2018, the Russian Central Bank sold virtually all U.S. government bonds. Instead, the Kremlin made a bet on the yuan, gold, yen or Euro. In trade of Russia with the EU and China, the European currency will soon overtake the us. However, sometimes such an approach to pay dearly. Last year, the Russian economy suffered heavy losses due to the weakening of the yuan. Unlike Moscow, Beijing is not so much vulnerable to us sanctions, continues publication. But Asia really wants to limit the influence of the dollar. The Asian financial crisis in the late 90s led to the fact that China became the largest creditor of the United States. Now China is trying to get rid of the dollar and make the yuan a world currency. The great success of Beijing has achieved in 2015, when the international monetary Fund has included the Chinese money of the prestigious group of currencies. In this regard, China is making a big bet on its economic might and “anisazi” of trade in raw materials, not gold. Unlike Russia, the precious metal is a relatively small part of all reserves of the country. “Turkey seems to have become the new Russia,” the newspaper writes. The government of Recep Tayyip Erdogan is doing everything big bet on gold. In recent years purchases of the precious metal has increased significantly. Ankara also increasingly moving away from your partner for NATO — USA. Dollar for many companies in Turkey is becoming problematic currency. And it is connected not only with the threats of the White house Donald trump, who promises to “destroy” the country’s economy through sanctions but also with the disastrous financial policy pursued by Erdogan himself. The country suffers from high inflation. Many companies pay their debts in dollars, and profits are getting to the weak Lira, which they have problems with meeting their financial obligations. The President encourages his people to buy the domestic currency, but this does not help, therefore, the gold purchases needed Ankara not only to get rid of the dollar and to stabilize the Lira, the paper concludes. Source