– “This is a financial war … Russia is dumping Treasuries to get out from under dollar hegemony” – Rickards on CNN Money
– Russia ramping up gold buying and has “tripled gold reserves in 10 years,” from 600 to almost 2,000 tonnes
– “Russia is pushing back” against U.S. sanctions using cyber financial warfare and acquiring gold bullion as a hedge
– “The dollar is in long-term decline” and it may follow the British pound which lost its reserve currency status between 1913 and 1944
– “Alternate payment systems” as proposed by German foreign minister are being created right now and it “could affect the US dollar very rapidly”
Transcript From 3 Minute Gold News
FINANCIAL WAR WITH RUSSIA
The Russian economy is the 12th biggest in the world and it’s one of the three largest natural resource exporters. So US sanctions are having some effect but the Russian Central Bank is handling the situation very well.
It’s important to note that this is a two-way street. There’s a little truth in the idea that the US is omnipotent and can throw sanctions on Russia to get what they want, but Russia is pushing back.
Putin’s not the kind of guy to stand still and take it.
Russia’s response to sanctions is asymmetric (so not in the same way as the US). They meddled in the 2016 election, they’ve done cyber financial warfare, they’ve put sanctions on the U.S. But Russia’s most important response has been to dump US Treasuries and to buy gold in order to get out from under the US dollar hegemony.
This is a financial war and it’s been going on for a long time.
Russia added almost 29 tonnes of gold to its reserves in July. Their central bank now owns gold worth an estimated $76 billion.
This helps Russia against these sanction.
Russia just passed China in their gold buying and so that’s caught the attention of many. Plus they’re getting close to accumulating the nice round figure of 2,000 tonnes.
Russia has been accumulating physical gold for ten years now.
Ten years ago their reserves were 600 tonnes of gold and now they have almost 2,000 tonnes.
They’ve tripled their holdings.
The gold market is funny because while it’s liquid, so you can always buy or sell, it’s also thinly traded.
That means buying and selling can impact the market easily and change the price. (You don’t want to buy too much too fast because others will rush in and start buying also and the price will lift quickly because of it.)
Russia has a standing order to buy gold. They’ve let their dealers know that they want to buy consistently but not too much at once. So they buy 10 tonnes or 20 tonnes; a small amount every month.
They’ve been transparent about it, which is smart, so they don’t shock the market.
But 10 – 20 tonnes a month for ten years is how they got up to 2,000 tonnes. This has been going on for a very long time.
In 2009 Jim facilitated a financial war game for the US Pentagon, and he warned the Pentagon at the time that countries would start accumulating physical gold.
He got laughed at by the Harvard professors but it’s turned out to be exactly right.
US DOLLAR WORLD RESERVE CURRENCY STATUS
The dollar’s position right now is very strong. About 60% of global reserves are held in US dollars. It’s about 80% of global payments and almost 100% of global oil pricing.
You could look at that and say it’s impregnable and you can’t take it down.
But you could have said something similar about the United Kingdom’s pound sterling in 1913. Then within a year, with the outbreak of World War I the pound sterling was already into a long term decline. By 1944 at Bretton Woods it was almost a footnote.
So these things don’t change overnight, but they can change quickly.
THE NEW AXIS OF GOLD
What’s important is that Russia is adding to their gold reserves. So is China. So is Turkey. So is Iran and others.
Jim has talked to high up officials at the Pentagon, the Treasury and the Federal Reserve. The Pentagon understands what Jim’s saying but they don’t have any authority over the dollar. The Treasury seems to be asleep at the switch, and the intelligence community is lethargic about gold.
Jim talked to the highest ranking officer in the intelligence community and the officer said, “Oh well, somebody’s got to own it.” Like it was a yard sale or used furniture sale, and no big deal.
The big picture is that all of these countries are trying to get out from under the US dollar hegemony.
And that’s going to happen.
When it does the power of the US to impose sanctions will be gone.
They are all building alternative payment systems to the US dollar system of SWIFT.
The German foreign minister said the other day that Germany needs an alternate payment system.
One way for these countries to get out from under the US dollar payment system is to create their own cryptocurrencies.
Not Bitcoin (Jim doesn’t like for reasons covered in past 3 Min. Gold News blogs), but they could use a cryptocurrency with distributed ledger between China and Russia – imagine a Xi coin and a Putin coin – denominated in SDRs (Special Drawing Rights), which is the world money that is created by the IMF (International Monetary Fun).
They could back their new digital coins with gold. And the US dollar would not be involved in that scenario.
This could happen if the US doesn’t reassert dollar hegemony.
One good way for them to do this would be for the US to buy more gold. Jim doesn’t expect them to do this but that would be part of his advice to them.
These alternate payment systems are being created right now. It’s not science fiction and it could affect the US dollar very rapidly.
News and Commentary
29 Aug: USD 1,204.30, GBP 935.14 & EUR 1,032.33 per ounce
28 Aug: USD 1,212.75, GBP 939.88 & EUR 1,037.02 per ounce
24 Aug: USD 1,189.95, GBP 928.76 & EUR 1,029.43 per ounce
23 Aug: USD 1,187.30, GBP 923.24 & EUR 1,027.61 per ounce
22 Aug: USD 1,196.85, GBP 928.25 & EUR 1,032.88 per ounce
21 Aug: USD 1,194.10, GBP 931.28 & EUR 1,036.12 per ounce
Silver Prices (LBMA)
29 Aug: USD 14.69, GBP 11.40 & EUR 12.60 per ounce
28 Aug: USD 14.90, GBP 11.56 & EUR 12.74 per ounce
24 Aug: USD 14.62, GBP 11.37 & EUR 12.63 per ounce
23 Aug: USD 14.63, GBP 11.34 & EUR 12.62 per ounce
22 Aug: USD 14.81, GBP 11.49 & EUR 12.77 per ounce
21 Aug: USD 14.78, GBP 11.52 & EUR 12.83 per ounce
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