The G-8 is now the G-7 with Russia being sanctioned

The planned G-8 meeting in Sochi Russia is being cancelled and will instead be hosted in Brussels without Russia. This change occurred after the Russian annex of Crimea, with the group of 7 (the U.S., Germany, the U.K., France, Italy, Canada, and Japan) trying to dissuade Russia from any further Ukraine conflict. The International Monetary Fund is releasing an announcement tomorrow after talks about a bailout loan for Ukraine in the order of 15-20 billion dollars.

The proposed plan to stop further Russian conflict is to establish new economic sanctions that aim to cripple the struggling Russian economy, and draw nearly 75 billion out of Russia in the next year if necessary.

With Russia being one of the largest Platinum producers, and platinum being in a huge deficit with the continuing mining strikes in south Africa, Russia may turn to platinum as a saving grace to bail out their economic woes. It is speculated that the Russian reserves of platinum and palladium are dwindling and along with the crunch on supply we could be nearing the point where the demand simply far exceeds the available supply, and by the laws of economics the price has no where to go but up.

The Golden Yuan and what it means for precious metals

The central currency of China, the Yuan, is becoming more widely accepted and traded for in the global economy. With China’s ever increasing economic growth they are looking to de-Americanize the global economy. There are a few opposing viewpoints on what China is going to do, and if it would be possible to back their currency with Gold. The total amount of Gold in the world is now estimated to be valued at 9 trillion dollars, China currently owns approximately 110 billion worth of that in physical Gold. Even if China was to acquire every ounce of Gold in the world, they could only back 49.5% of its total currency, so what does this mean? In my opinion with China being a very large producer of Gold, as well as buying it feverishly, the value of Gold as well as everything tied to it can only go up.

There is more than one way precious metals go up in value, demand can go up, which it is, or the currency they are being purchased with can go down in value. If the Yuan becomes the new reserve currency you can expect the relative value of the dollar to go down and the price of precious metals to rise. Combine increased demand and the currency issues and you have a volatile situation.

There are several scheduled meetings to discuss the possibility of backing the Yuan with Gold, as soon as the 10th and 11th of April, so expect to hear some new news about this topic soon enough.

South African Mines Still in Trouble 3/17/14

The most recent reports have concluded that negotiations are still ongoing between the miners and mine owners, with the gap between demands shrinking very little. The secondary problem that is now developing is that the power supply to those same mines is now being rationed, causing further issues with production. This is now the eighth week of limited production bringing the total deficit of platinum production to over 600,000 Toz.