At the end of the 1980s, there was a feeling in the world that the Communist regime of USSR had imploded under its own internal pressures and that the democratic values and hence capitalism had triumphed. Now it seems that Russia is stepping into the ring again and they are using the capitalistic tools of the West against itself in order to rise back to being the economic superpower it once was. The new economic hegemony and balance of the world now lies with China, US and Europe and based on its natural resources, now Russia wants a piece of the pie as well.
The latest in these efforts is the data released recently which has proven that in the past decade, the central bank has accumulated a total of 570 metric tons of the metal. This comes on the back of the statement made by Vladimir Putin saying that the US is endangering the global economy by using its currency. This has now made Russia as the largest buyer of gold over any other country and in addition to its natural resources in shape of oil; it seems they are betting on commodities to save itself from any financial shocks. Analysts see this development in different shades.
The same move by Gordon Brown in 2002 forced him to sell the gold at a record low when they had to liquidate their position and was costly on the exchequer while Putin’s record has been much more successful in relation to this. However, the dynamic and speculative world of finance makes the past irrelevant in a blink of an eye and it will have to be seen how Putin’s bet works out when he needs funds in the future.
It seems that there is a new battle in the world now where substantial and political war making is leaving the borders and economics is being used to gain supremacy over one another. The loan from China to the US is a huge development as it restricts the options the US has at its disposal to take any actions and they also have to show their cards to their creditors. The new landscape developing is a mirror image of the decade of 90s in reverse as the political and economic monopoly that the US gained in that decade is being disintegrated in this decade. After the Cold War ended, the US was the only surviving superpower but now it seems with the emergence of China and other emerging markets, at least the economic stranglehold us being relaxed.
The new found perseverance of Europe through the Eurozone crisis is also a dent in that power and now with Russia taking the opposite positions; it seems the world is getting more and more competitive in the wake of the demise of US. The best indication of this new shift in the world power paradigm is seen in the fact that most of the world is now holding position which is counter to the US one. The fall of one is the gain for the other. Seems a lot like the mentality of the Cold War. Only this time, the wall that stands between the two sides is not made of brick and mortar but of commodities and some IOUs.