by Dave Kranzler
Investment Research Dynamics
Though most investors expect some type of pullback in the precious sector to “reset” the various technical indicators that have become “overbought,” the geopolitical situation with Ukraine has given the sector a flight to safety bid. Interestingly, the response by the west to the Russian invasion of Ukraine to freeze Russia’s foreign currency reserves held by western Central Banks has started to shine light on the risk for Governments to hold fiat currency reserves in foreign Central Banks. The Wall Street Journal featured an article on “what is money?” earlier this month:
“The entire artifice of “money“ as a universal store of value risks being eroded by the banning of key exports to Russia…if currency balances were to become worthless computer entries and didn’t guarantee buying essential stuff, Moscow would be rational to stop accumulating them and stockpile physical wealth in oil barrels, rather than sell them to the West. At the very least, more of Russia’s money will likely shift into gold and Chinese assets.”