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Sunday, February 8, 2015

RUSSIA GOLD BASED CURRENCY.

Russia buys record amount of gold. 
WILL PUTIN CONVERT TO A GOLD-BASED CURRENCY ?   


THE FINANCIAL COMMUNITY HAS NOTICED THIS GOLD-BUYING SPREE FOR A LONG TIME NOW, SEVERAL YEARS ACTUALLY, BUT WITH RECENT UPHEAVAL IN THE UKRAINE AND THREATS OF FURTHER SANCTIONS BY THE U.S., PUTIN MAY SEE NO ALTERNATIVE BUT TO "PLAY THE GOLD CARD", AND THERE IS VERY LITTLE THE U.S. COULD DO TO STOP HIM!

[NOTE, UPDATE, APRIL 14, 2015: RUMORS ARE FLYING THAT RUSSIA MAY HAVE BEEN ON TRACK FOR AN AUGUST TO SEPTEMBER, 2015 DATE FOR GOING ON THE GOLD STANDARD, AND QUITE A FEW ARE SAYING THAT IS THE REASON THE SAUDIS CREATED THIS LOW CRUDE OIL DEAL, PERHAPS AS A TRADE-OFF WITH THE UNITED STATES.
RUMORS ARE JUST RUMORS, FOR NOW, BUT WHAT IF THE U.S. SAID TO THE HOUSE OF SAUD, "LOOK, YOU DROP OIL PRICES AND WE'LL HELP KEEP THE ISLAMIC STATE OFF YOUR BACK. THAT WAY WE BOTH HAVE THE SATISFACTION OF KICKING RUSSIA IN THE FACE TO STOP THIS GOLD STANDARD THING."????

MAKES SENSE, BUT NOW OUR BIG BOYS ON WALL STREET ARE WHINING ABOUT LOW OIL PRICES.
LIKE I SAID, RUMORS. ] 


"Mises Institute contributor Marcia Christoff-Kurapovna believes that Russia may be in the process of planning for the introduction of a gold-based currency, and would be better off for it.

"Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow," Christoff-Kurapovna notes in an analytical article published Friday on the libertarian think tank's website.

Economists close to Vladimir Putin have for years "been expressing [Russia's] unwillingness to remain at the monetary mercy of the US and its NATO allies," among them Sergei Glazyev, economic advisor to the president, and political ally to Deputy Premier Dmitri Rogozin."   

AGAIN, WHO CAN SAY?

FUTURES MAG WROTE THAT : 

"The last published gold holding number for Russia in Refined Bullion Bar gold on deposit is approximately 1206 tons (World Gold Council data) and I'm here to tell you they have much more gold on hand than what has been reported as of late. "

WHEN IRAQ AND LIBYA WANTED GOLD FOR OIL, WE SAW WHAT HAPPENED TO THEM....INVASION BY U.S. AND NATO/ALLIED FORCES AND THE DEATH OF THEIR LEADERS.

RUSSIA IS NOT IRAQ NOR LIBYA. 

RUSSIA IS STILL A WORLD POWER WITH A LARGE ARSENAL OF NUCLEAR WEAPONS, AND RUSSIA HAS STRENGTHENED TIES WITH CHINA, WHICH HAS A LOT MORE "NUKES" AND WOULD NOT HESITATE TO USE THEM.

GIVEN SUCH AN ALLIANCE AND KNOWING THAT MOST OF THE WORLD IS AT LEAST A BIT WEARY OF THE DOLLAR AND THE U.S. DOMINATING, AMERICA WOULD PROBABLY NOT PUSH RUSSIA MUCH FURTHER.

PUTIN DOES NOT "PLAY".

Central Bank of Russia spent over 6 billion U.S. Dollars on gold purchases last year in an attempt to shift away from a dependency on the dollar.

According to research by Thomson Reuters GFMS, Russia accounted for nearly one-third of the central banks 461 ton gold purchase.
Russia’s central bank bought 152 tons of gold worth USD 6.1 billions in the first 11 months of 2014, showing a substantial 123% increase compared with the previous year.
It’s the most Russia has spent on the yellow metal since the break-up of the Soviet Union.

Russia accounted for about one-third of central banks’ gold purchases last year as the country spent more on the metal than at any time since the break-up of the Soviet Union amid escalating tensions with the west and a collapse in the value of the rouble.

Interest was also strong from central Asian states. Kazakhstan bought 46 tonnes through 2014 and Azerbaijan 10 tonnes, according to the survey. Iraq also acquired 48 tonnes in the first half of the year.

SINGAPORE, Jan 27 (Reuters) - Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed on Tuesday.

Russia's gold-buying spree comes amidst a bearish outlook for its economy, which is expected to slide into recession this year on low oil prices and the fallout from sanctions over Ukraine.
Ratings agency S&P cut Russia's sovereign credit rating to junk status on Monday, bringing it below investment grade for the first time in a decade.  
April, 2015: 
LET'S JUST FACE IT...THE WHOLE WORLD IS WEARY OF AMERICA'S FIAT CURRENCY.
WHO NEEDS THAT WHEN MORE STABLE CURRENCY IS "OUT THERE"?
AND, AGAIN, JUST FACING FACTS, THOUGH I AM AN AMERICAN, ARE THERE EVEN A DOZEN NATIONS THAT WOULD NOT LIKE TO SEE AMERICA TUMBLE FROM IT'S PLACE AS "TOP DOG" IN THE FINANCIAL/ECONOMIC ARENA, SEE A NEW PLAYER RISE TO THE TOP FOR A CHANGE?

Just this past weekend, as Bloomberg reported, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain SOME gold to help stabilize the currency.  

“We could ask that gold be nominated as part of the SDR. That is one thing I think is quite likely to happen”. 


"There has been much discussion and division over whether the world was moving towards a multilateral super-sovereign reserve currency by way of the Special Drawing Right of the International Monetary Fund or towards a new gold standard by which all currencies would be valued once again on gold. 


Were the BRICS countries going to overthrow the western banking cabal?  Was the US dollar going to inflate into oblivion?  Was the SDR going to become the new reserve currency?  Was a new gold standard going to be implemented instead?


So many questions with no clear outline or determinations on what exactly was going to happen. 


NOTHING fully explains the demand by other countries for gold, such as Russia and India, or even Germany demanding its gold back from the United States. 


Western and eastern banks are all controlled by the Bank for International Settlements.


And just about everyone is predicting that BOTH the renminbi

and GOLD will be added to the SDR basket valuation."

DOES AMERICA HAVE ANY GOLD THAT IS ACTUALLY AMERICA'S  GOLD? 

ARE FORT KNOX AND THE FEDERAL RESERVE VAULTS EMPTY AS MANY NATIONS HAVE ACCUSED THE U.S. OF?
WE KNOW THIS: THE U.S. DOLLAR HAS BEEN A "RESERVE CURRENCY", AND WE ALSO KNOW THERE IS NO "RESERVE" TO BACK IT UP.

WHY WOULD ANYONE SEE A FIAT CURRENCY AS BETTER THAN A GOLD-BACKED CURRENCY, WHETHER THAT IS RUSSIAN RUBLES OR GOLD DINARS?

A "CURRENCY COLD WAR"?     

Russia is prepared to play strategic hardball with the West on the issue: the governor of Russia’s central bank took the unusual step last November of presenting to the international media details of the bank’s zealous gold-buying spree. 

The announcement, in sharp contrast to that institution’s more taciturn traditions, underscores Moscow’s outspoken dismay with dollar hegemony; its timing suggests coordination with the top rungs of government to present gold as a possible currency-war weapon.

RUSSIAN MONETARY FUNDAMENTALS ARE SOUND     

While the Russian economy is structurally weak, enough of the country's monetary fundamentals are sound, such that the timing of a move to gold, geopolitically and domestically, may be ideal. 

Russia is not a debtor nation.! 

 At this writing in January, Russia’s debt to GDP ratio is low and most of its external debt is private. Physical gold accounts for 10 percent of Russia’s foreign currency reserves. 

The budget deficit, as of a November 2014 projection, is likely to be around $10 billion, much less than 1 percent of GDP. 

The poverty rate fell from 35 percent in 2001 to 10 percent in 2010, while the middle class was projected in 2013 to reach 86 percent of the population by 2020.

The repercussions of Russia on a gold-exchange standard would be immense. Above all, it would mean the first major schism in the world's monetary order. 

China would quite likely follow suit. 


It could mean the threat of a severe inflation in the United States should rafts of unwanted dollars make their way back across the Atlantic — the Fed's ultimate nightmare. 

Above all, the country will avoid the extreme debt leverages which would not have happened had Western capitals remained on gold.

The geopolitics of gold also figure into Russia’s increasingly close relations with China, a country that also has made clear its preference for gold over the dollar. (Russia recently edged out China as the world's top buyer of the metal.) 

In the aftermath of the $400 billion, 30-year deal signed between Russian gas giant Gazprom and the China National Petroleum Company in November 2014, China turned its focus to the internationalization of its own gold market. 

IT WOULD BE A SOLUTION TO RUSSIA'S MONETARY DILEMMA 

Russia has made plain her overriding monetary objective: to do away with the US dollar for all her trade, an ambition she shares with China and their Asian partners. 

 Furthermore, in the short-term the rouble's weakness is undermining the Russian economy by forcing the Central Bank of Russia (CBR) to impose high interest rates to defend the currency and by increasing the burden of foreign currency debt.   

There is little doubt that one objective of NATO's economic sanctions is to harm the Russian economy by undermining the currency, and this policy is working with the ruble having fallen 30% against the US dollar this year so far with the prospect of further falls to come.

There is a solution which was suggested in a recent paper by John Butler of Atom Capital, and that is for Russia to link the ruble to gold, or more correctly put it on a gold exchange standard*.  

The proposal at first sight is so left-field that it takes a lateral thinker such as Butler to think of it. 
Separately, Professor Steve Hanke of John Hopkins University has alternatively proposed that Russia sets up a currency board to stabilise the rouble. 

Professor Hanke points out that Northern Russia tied the ruble to the British pound with great success in 1918 after the Bolshevik revolution when Britain and other allied nations invaded and briefly controlled the region. 

What he didn't say is that sterling would most likely have been accepted as a gold substitute in the region at that time, so running a currency board was the equivalent of putting the rouble in Russia's occupied lands onto a gold exchange standard.

AS THE ‘SANCTIONS WAR’ HEATS UP, WILL PUTIN PLAY HIS ‘GOLD CARD’? 

This is already in evidence, with Putin having signed major deals in the energy 
and defense industries with China and India, among other countries. 

Stronger Russian ties with the other BRICS ( acronym for  Brazil, Russia, India, China and South Africa.), or other countries for that matter, may be of some concern to the US, but what can the U.S. do to hinder that?


Under Putin’s leadership, Russia has maintained its territorial integrity, something that had been left in question following the collapse of the Soviet Union, and

Russia retains a formidable military capable of defending its vast frontiers (although not capable of policing the world).  



The economy has grown rapidly and, while still resource-dependent, has begun to diversify in many ways.


Russia also has an advantageous tax system, with a top 13% rate of income tax.

Given these achievements, Putin is not a leader to be taken lightly
and we should pay attention when 
he says it it his desire to end the ‘dictatorship of the 

dollar’, as he did just this week.
HE IS NOT, BY ANY MEANS, THE ONLY HEAD OF STATE WHO IS SICK OF THE U.S. DOLLAR.

Perhaps he will indeed play the gold card he has hidden up his sleeve
and thus kill two birds with one stone:
shore up the rouble and Russian economy on the one hand;
dethrone the dollar on the other.



[NOTE, PLEASE: There was considerable technical difficulty editing this blog. Spacing and fonts seemed main issues. Apologies. Google is not the ideal for blogs on a good day.}

Some sources for this blog not cited/linked above:

http://www.marketoracle.co.uk/Article49336.html

http://www.goldmoney.com/research/analysis/russia-s-monetary-solution

http://www.atomcapital.co.uk/wp-content/files_mf/1416418354AR_1114.pdf  

http://www.zerohedge.com/news/2015-03-07/threat-dollar-world%E2%80%99s-primary-reserve-currency

7 comments:

  1. I can't manage to fit in the general senario of this economic shifting, why in this period oil-rich nations are selling off?

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    1. @ Anonymous Re: "why in this period oil-rich nations are selling off?".
      I'm not sure what you're asking here.
      Why would oil-rich nations sell GOLD?
      if you could clarify what you mean, I'm sure someone can give you an answer.
      The recent gold fluctuations are a bit strange, to say the least, especially after it appeared China was gobbling up gold and then cut back.
      Saudi Arabia has also been dipping into the gold pool, but America SHOULD be scrambling to get what it can, and a recent feud in the state of Oregon involving some rather nice gold mines there tat it appears our 'Bureau of Land Management" is trying to grab, if the BLM grabs the mines, may afford the U.S. a wee bit more gold to cough up what Germany, Mexico and other nations have demanded from the Federal Reserves EMPTY vaults! ALL nations seem to want out from under the U.S. dollar, Anonymous. It's just SCRAP paper, after all, not worth the ink it takes to print it...MONOPOLY money.

      Delete
  2. Sorry for not being specific.
    I meant why these nation are selling off their oil.
    I understood very well the point you are making regarding to gold, makes complete sense

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    Replies
    1. (HOPE YOU DON'T MIND ALL-CAPS. IT'S EASIER ON MY OLD EYES THAN NO CAPS)
      THE U.S. IS A REAL OIL-GUZZLER, AND WE USE ALL WE CAN PULL OUT OF THE GROUND, SO UNTIL QUITE RECENTLY, WHEN WE STARTED PRODUCING ENOUGH SHALE OIL TO MAYBE CONSIDER SELLING SOME, WE, LIKE MOST OF EUROPE, DEPENDED ON FOREIGN OIL. NATIONS WHICH HAVE PLENTY OIL & WERE HAPPY TO SELL TO US.
      BUT RUSSIA IS #1 IN THE WORLD IN OIL PRODUCTION, & HAPPY TO SELL TO ANYONE.. RUSSIA CONTROLS SOME VERY NICE OIL FIELDS, MAKES A LOT OF MONEY SELLING TO OTHER NATIONS SHE CAN RUN OIL TO. THE OPEC NATIONS HAVE PLENTY OIL FOR SALE. IRAN RECENTLY BECAME THE 4TH LARGEST OIL PRODUCER. SAUDI ARABIA UPPED ITS OIL PRODUCTION TO TAKE TOP SPOT AWAY FROM RUSSIA. VENEZUELA HAS SURPLUS OIL FOR SALE BUT NOT AS MUCH AS CHINA AND CANADA. CANADA. SELLS TO THE U.S.
      CHINA JUST TOOK TOP SPOT AWAY FROM AMERICA FOR IMPORTING OIL. ITS NEEDS ROSE FASTER THAN ITS PRODUCTION WHILE AMERICA PRODUCED MORE TO TRY TO FEED OUR GLUT.
      WHAT IS DISTURBING FINANCIAL MINDS, ESPECIALLY HERE, IS THAT NATIONS WITH THE OIL WE REQUIRE SO MUCH OF MAY START DEMANDING WE ALL PAY FOR OIL WITH EITHER GOLD OR A GOLD-BACKED CURRENCY, WHICH AMERICA WILL NEVER HAVE AGAIN. THE FEDERAL RESERVE MAKES SURE OF THAT!
      GOLD IS DESIRABLE AS IT IS RARE AND FEW NEW GOLD MINES ARE SHOWING UP. IT JUST MAKES SENSE TO HAVE SOMETHING LIKE GOLD, WHICH ALL NATIONS DESIRE MUCH AS THEY DESIRE OIL, INSTEAD OF PAPER CURRENCY.
      THE U.S. IS HEADED FOR FINANCIAL RUIN, SOME SAY BY SEPTEMBER THIS YEAR, BUT MAYBE NOT.
      OIL IS CALLED BLACK GOLD, BUT AS WE MOVE TO A GLOBAL GOVERNANCE, A GLOBAL DICTATORSHIP RUN BY THE GLOBAL BANKING CARTEL, THEY LIKE GOLD. SO THOSE NATIONS WHO STILL HAVE SURPLUS OIL TO SELL WANT WHAT THE BANKERS WANT...GOLD FOR OIL.
      HOPE THAT HELPS YOU UNDERSTAND AND MANY THANKS FOR YOUR COMMENTS.

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  3. OIL IS VERY "POLITICAL". WHOMEVER HAS THE MOST OIL, OR GOLD, CAN HOPE TO CONTROL QUITE A BIT ON THE WORLD SCENE. HAVING OIL MEANS HAVING A CERTAIN POWER. NATIONS LIKE GERMANY ARE MOVING TO ALTERNATIVE ENERGY SOLUTIONS, REPLACING OIL WITH SOLAR AND WIND AND OTHER MEANS OF PRODUCING THE ENERGY NEEDS OF THEIR NATIONS. POLITICAL POWERS WHO HAVE A LOT OF OIL KNOW THAT THEY CAN'T KEEP PEOPLE FROM HARNESSING THE ENERGY FROM THE SUN OR WIND OR WATER, ETC.
    IF THE POWER-MAD POLITICIANS CAN'T CONTROL PEOPLE WITH OIL RESERVES, THINGS WILL GET A LITTLE "DICEY". IT MAKES OUR POLITICIANS WHO ARE WHORES TO BANKERS AND OIL PRODUCERS VERY ANGRY TO SEE THE NEED FOR OIL GO DOWNHILL. I THINK THOSE WHO EITHER MAKE MONEY OFF OIL OR GET POWER OFF OIL WOULD START WORLD WAR 3 TO KEEP OIL AS THE MOST-USED ENERGY SOURCE.
    THE U.S. WOULD NOT BE BENEATH INVADING ANY SMALLER, NON-NUCLEAR CAPABLE NATION ON EARTH TO ROB IT OF ITS OIL OR GOLD RESERVES.
    I HATE HAVING TO ADMIT THAT, BUT IT IS THE TRUTH.
    GREED MAKES POLITICIANS AND WALL STREET AND BANKERS MORE EVIL THAN MOST ADMIT.
    POWER...IT'S ALL ABOUT POWER.
    POWER CORRUPTS.

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  4. Power and money... True story.
    I'm from Italy witch is what I consider the most LEGALLY corrupted country. So much s**t is going on here.
    Sad to say but I'm starting to think and embrace the fact that this situation cannot be stopped or even limited... what i see is that people are not aware of what is going on because they don't seek for their own information and they don't use their logic to get an answer, relying always on other's people thinking.
    But we try to do our best.
    Thanks a lot for your work.


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  5. @ Anonnymous, benvenuto al Tea Room. Miei puzza italiani. Due anni in collegio e quasi cinquant'anni fa.
    Non sono stato vicino a Italia dal 1968. Immagino molto è cambiato.
    Il mondo intero ha bisogno di rivoluzione di riprendere quello che abbiamo perso,
    Ti auguro il meglio.
    Alzati e ruggire!

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