Tolkunbek Abdygulov, National Bank of the Kyrgyz Republic
Sometimes a few countries actually turn out to be fiscally responsible role models for you and your portfolios. This past week, Germany and little-known central Asian nation Kyrgyzstan both fell into this camp, offering you fantastic practical advice for protecting your assets with their national actions.
Last week, the Bundesbank (German Central Bank) announced that it has successfully completed the repatriation of half of its legendary gold reserves ahead of schedule (three years ahead, to be precise), with 583 tons of their gold moved back from New York and Paris.
You might be wondering why the nation with the world’s second largest gold reserves would suddenly decide to no longer trust the Federal Reserve Bank of New York or the French Central Bank in Paris to inventory its vast holdings of over 3,375 metric tons of gold. Only 400 metric tons of German gold is staying with the Bank of England’s largest gold vault on earth.
There are various reasons offered for why Germany no longer trusts its fellow central banks. The first is that the combined blows of the 2007/2008 Global Financial Crisis, coupled with the 2012 European Sovereign Debt Crisis, warned the German government to keep their gold at home.
The second theory supported by Reuters’ reporting last week argues Germany actually fears a breakdown of the Euro and even European Union in the next few years. They could be contingency planning for the now-distinctly real possibility that their gold “may be needed to back a new deutsche mark, should the euro zone break up.”
Germany’s Bundesbank has given credibility to this idea with their statement on why the gold is being repatriated: The new storage plan is intended “to build trust and confidence domestically.” That actually makes sense if you are preparing to revive a currency abandoned over 15 years ago. The lesson from Germany is to have your physical gold somewhere where you can “keep a close eye on it.”
Germany is not the only country that has some valuable lessons to teach you for your retirement portfolios. Landlocked country Kyrgyzstan, hidden between gold superpower China and Kazakhstan, has quietly begun a revolutionary experiment with the yellow metal which deserves your attention.
Its Central Bank Governor Tolkunbek Abdygulov is encouraging his six million citizens to each own some gold. Specifically, he wants each citizen to possess minimally 100 grams (3.5 ounces) of gold. This is not so difficult for Kyrgyzstan, since their largest natural resource and export is the shiny yellow metal.
Despite their natural abundance of gold, Kyrgyzstan’s Central Bank continues to purchase it even when other global central banks have pulled back in recent years. Consider this chart:
This means the central bank of Kyrgyzstan has boosted its gold holdings by over 350 percent in ten years. Central Bank Governor Abdygulov said:
“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings. We are hopeful that our country’s population will learn to diversify its savings into assets that are more liquid and –more importantly — capable of retaining their value.”
Is Your Retirement Portfolio Protected by Diversification Into Precious Metals?
The lessons from Germany and Kyrgyzstan are equally clear. You should diversify a portion of your assets into precious metals like gold. When the global financial dominoes finally fall, you can be sure that at least these two nations will be standing on solid financial footing. You can not count on the Federal Reserve and U.S. Treasury to maintain the purchasing power of your dollar-denominated retirement holdings, since every paper currency in history has ultimately failed and been replaced by precious metals-backed ones eventually.
You can rely on gold to protect your retirement portfolio’s purchasing power and value as it has successfully done since almost the beginning of recorded human history. Click here to get your Regal Assets’ no-cost, no-obligation gold IRA rollover kit so that you can get all the facts on protecting your retirement assets with a partial diversification into tangible gold.