Needless to say, in an era when the balance sheets of many central banks have expanded to unprecedented scope, there has been plenty of discussion of those last two trends, causing a pessimistic sect of economic experts to augur pending doom in the repatriation schemes and the shopping sprees by Moscow and Beijing.
“By purchasing gold, China and Russia have indicated that they understand how fragile things are and that they’re getting ready for the demise of the dollar,” said James G. Rickards, author of “The Death of Money: The Coming Collapse of the International Monetary System.” “At the same time, other countries have been watching what they’re doing and are saying to themselves, ‘If things are really that bad, then we better get our gold back,’ possession being nine-tenths of the law.”
Of course, not all economists have interpreted gold’s resurgence as heralding a geopolitical disaster.
To Joshua Aizenman, a professor of economics and international relations at the University of Southern California, dabbling in gold is mainly an attempt by bankers and officials to send a message to the world — one that signals an appetite for power or that broadcasts a desire to challenge a rival. “I doubt that the Chinese or the Russians actually believe that gold is such a great investment in terms of pure returns,” Professor Aizenman said. “But if they’re trying to suggest that they’re unhappy with the dollar or that they want to become a global player, then gold is very powerful.
“The investment is a symbol,” he explained. “It’s made for political, not financial, gain.”
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