All political views aside, this is such a big deal I just had to share it with you.
Turns out Russia is tired of the Euro zone debt crisis and the U.S. Federal Reserves constant printing of the dollar.
Last April, Russia added 300,000 troy ounces to it’s gold reserves. This brings Russia’s official gold reserves to a whooping 40.1 million troy ounces.
And we know they have more than what they are telling the world.
This however was not the only big development in the commodities market last month. (Don’t worry, I’ll tell you why this affects stocks in a moment).
Here’s what CNBC Reported:
“Data from Thomson Reuters’ Lipper service showed on Thursday that investors in U.S.-based funds pulled $597 million out of funds that specialize in commodities and precious metals in the week ended May 20, the biggest outflow since December 2013.”
Did you notice the difference between those two stories?
Russia added 300,000 troy ounces to it’s growing reserves.
U.S. fund mangers sold more than $597 million in commodities in one week!
So Russia is stockpiling while U.S. managers are selling….
Which group has it right?
More importantly, why does this matter at all?
Short answer: Who knows, yes.
When it comes to investing in stocks, you never want to be doing the same thing mutual fund managers are doing. It’s never wise to follow the herd.
We can’t say for sure Russia is right, but what we do know is the mutual funds are wrong. When they jump ship from any part of the market, it’s almost a sure sign it’s time to get in.
U.S. mutual funds are leaving commodities and jumping into stocks because the stock market just keeps going up.
Fund managers chase market bubbles. So it’s a sign the stock market may be due for a crash soon.
As for commodities, the more Russia buys and the more U.S. intuitions sell, the better investments they will become for us.
It just might finally be time to consider adding some gold to your portfolio to take advantage to the temporary dip in golds price. I wouldn’t bet the farm on it though.