There’s a major global shift underway that may be difficult to read. While some of the old powers of the Middle-east, Far East and west are clearly struggling, other countries seem to be solidifying and strengthening.

What do you know of Kazakhstan? Most of us have little familiarity with it. Even typing it causes my fingers to ache.

Apparently the central bank of Kazakhstan has turned its sights to gold. For 2012 they plan on buying over 24 tonnes from local producers, increasing its total by over 30%. But that’s not all, they also plan on ditching over 15% of their euro exposure.

Perhaps emerging markets are recognizing the suicidal tendencies of fiat currencies, opting instead to strengthen their economies with tangible assets and real, hard, money. In recent years many have been increasing their gold holdings, including China, South Korea, Russia, Colombia and even Mexico.

It’ll be interesting to see how China’s economy performs over the next couple of years. They’re heavily exposed to the west. But they’ve also been very proactive in preparing for the future. Gold reserves continue to climb, even as dollar exposure continues to diminish.

Many have laughed at China because they built huge portions of cities, along with malls, that remain largely empty. However, in a recent discussion with an acquaintance who lives in China, it seems that this has been going on for some time. They’ll build in one location, preparing for an influx. He says that when he bought his current place it was like that. There was nobody there and the streets were empty. Today he says that there are many pedestrians, and that they must be very cautious when crossing the streets because of the volume of traffic in the streets. Once empty buildings are now bursting with people and businesses, and the local mall is a flurry of activity.

All this leaves us in the west scratching our heads and wondering what the future will look like there, even while those of us who bother paying attention attempt to prepare for greater economic chaos here.

Another country that is difficult to gauge is India. While their economy has performed amazingly over the past decade, they too are over-extended and facing serious deficit issues. But they’re also a nation of precious metals hoarders. How this will affect their economy remains to be seen.

Apparently India’s issues are severe enough to garner the attention of credit rating agencies. Standard and Poor’s stated early this week that India is being monitored closely, prompted mostly by the recent drop in their stock market on top of already declining economic growth and spurious policy. Already at BBB-, a drop could be highly detrimental to foreign investment interest.

Perhaps these factors have influenced the rupee’s recent drop against the dollar. But what many don’t realize is that gold has reached an all-time high priced in rupees this month. Dealers within the country stated that demand hasn’t flagged a bit, though in a land that has a history of jewelry accumulation, it has increased from an investment perspective.

The other BRIC nation, Brazil, seems to be holding on fairly well, if somewhat weak. Russia has been accumulating gold at a high rate, and continues to show a strengthening economy.

Most western nations appear to be ignoring gold still. Even with the apparent, although yet to be realized, failure of the euro, gold still seems to be a competitor that central bankers are reluctant to embrace. But the tide does seem to be shifting, with some of them turning their gaze back to the world’s true money.

There’s a lesson here for us. We can’t make our nation turn to gold. But we can make our own holdings do so.

For your prosperity,

J. Keith Johnson
The Gold Informant