As I’ve written previously, Russian writer Dmitry Kalinichenko wrote an article entitled “Grandmaster Putin’s Golden Trap”. I view that article as generally brilliant. Here are some more of my comments on Mr. Kalinichenko’s observations.
Mr. Kalinichenko’s article focused on what he believed to be Russian President Vladimir Putin’s most brilliant financial strategy: buying gold with US fiat dollars.
On the face of it, that “strategy” doesn’t sound like much. Buying gold with fiat dollars? It’s done every day. What’s so brilliant about that?
Well, the brilliance (or just common sense) behind Putin’s strategy is based on two fundamental premises:
1) The fiat dollar is significantly overvalued and thus able to purchase more than it’s really worth; and,
2) The price of physical gold has been artificially suppressed and is therefore far lower than its true price would be in a “free” (rather than “manipulated”) market.