Posted on 03/28/2022 2:21:31 PM PDT by delta7
I have been involved in financial markets for roughly 40 years, the news out this past Thursday was in my opinion more important than ANY announcement during those years. In fact, when I heard it, I thought of it as “the shot heard ’round the world”! But here we are Sunday and almost no discussion nor coverage of “Russia will demand trade payment from the unfriendly countries (the West) in gold…or rubles if they wish”. Are people so dumbed down they do not understand what was said?
First a little background. Russia has been sanctioned by the West and even had some of their FOREX reserves “frozen” (read STOLEN) in an effort to bleed them dry financially and stall military efforts. The freeze came several years after the US very mistakenly began threatening Russia with a cutoff from the SWIFT system. If anyone believes that Vladimir Putin has not used these years since the original threats, to prepare, I believe you are grossly mistaken. You see, the West absolutely needs Russian trade material more than Russia needs dollars.
Russia does not need the dollars to survive because they are not highly indebted. In fact, they are only 14% debt to GDP whereas most western nations are well above 100%. Besides, who does Russia owe money to that requires dollar payments? Western financial institutions? Do you see where this goes? By using SWIFT and the dollar as a weapon versus Russia, the US just blew a hole under the waterline in the USS Dollar!
To explain, if Russia demands either gold or rubles from the West, then recipients of trade will need gold and or rubles to make settlement. Some nations still have gold (poor Canada) but few have any rubles held in their reserve accounts. (In fact, the US has very small foreign reserve balances as it was not needed with the dollar itself being the world’s reserve currency and dollars can and are simply printed). How will the US settle trade with Russia? By sending Ft. Knox gold…which may or may not be there as no audit has been done since the 1950’s? Or by paying with rubles which we do not own? Or will we just forego the many natural resources we import from Russia?
The net result is severe dollar weakness and a strong bid under gold AND the ruble because any western nation wishing to import Russian material will need to either buy gold or rubles for payment. Another way of saying this is; they will need to sell either their local currency (or their dollar reserves held) in order to procure gold/rubles to make payment. Do you remember when supply and demand used to “matter”?
In the same way that Russia views the Ukraine as we did the Cuban missile crisis, Russia’s demand for payment in gold/rubles is to Kissinger arranging for Saudi Arabia to ONLY accept dollars for oil. Settlement flows are huge and not just on the margin. They are not just huge, they are “contagious” if you will? There are many countries who today use dollars because they have to, they have been forced to. I also believe much of the current trade settlement in dollars would be done in other currencies if it was “allowed”. It will not be a shock to see dollar trade flows shrink dramatically as many nations will use this as an opportunity to shed their dollar hegemony shackles!
Let’s finish with an overview. The US has for years relied on “King dollar” to support living well beyond our financial means. Having the privilege of issuing the world’s reserve currency (and the most powerful military) allowed the US to borrow $ trillions upon trillions. This is now changing after our bungled retreat from Afghanistan…and now Russia challenging the trade dollar. Can you imagine what US GDP would have been all these years without massive deficit spending? Can you imagine the levels where equity markets would be trading if not for all the easy and free credit thrown around? Can you imagine where interest rates would have been (and will be) if it wasn’t for reserve currency privilege? And thus, can you imagine what the US standard of living would have been? Unfortunately, we are about to find out the answers to all these questions!
Lastly, please understand the coming problems as they will entail every facet of life. US (and global) financial markets will be greatly affected as lower dollar demand will create a de facto margin call on an already struggling Ponzi scheme. Also, trade balances will be forced back into relative realignment. Meaning those with the greatest trade deficits will feel the pain the most. Especially those nations that allowed their manufacturing and production to leave and instead import. Is the current predicament because of poor judgement/decisions/planning…or, was it the plan all along?
Standing watch,
Bill Holter
I heard it was just Rubles, and that was bad news for the West.
———
Our MSM left out the gold and Bitcoin, when is America going to stop listening to western MSM? MSM left out the Gold and Bitcoin due to the consequences.
Americans are being played, again….in the meantime, bankers and the Fed are in panic mode. Question is did senile Joe realize using the USD as a weapon would destroy the USD, or simply not think out the consequences?
Vlad wins- checkmate by stupidity. Prepare accordingly, but use your brain.
Nothing Senile Joe does is clean , pure , righteous or has the US interest in mind.
Thanks potato head, you just by your own hand (and not even Congressional vote) destroyed our once strong dollar. Brace for impact.
These gold bug sites have been yapping about the death of the dollar for my entire adult life. Most are extremely ignorant as to why the dollar is used and the other part is they can play “look squirrel” away from high markups because at any minute the dollar is going to start crashing, and your gold will skyrocket, so who cares if you overpaid.
Russia’s annual GDP is 1.5 trillion. 6 trillion dollars of forex trades DAILY. The US dollar is part of 88% of those trades. So I’d like this math challenged joker to explain how his tiny ruble trading is going to dethrone the dollar.
So if we want to buy Russian oil they will only sell it to us if we give them gold or rubles. On the other side of that transaction Russia can only sell to those who are willing to pay in gold or rubles. Unless this russian roulette applies only to western countries they can get what they can get from non western countries. will they take rupees, yen, yuan? Oil is fungible. This is not a shot that we need to worry about. At least not a shot as bad as closing down US oil production.
Mr; Holter concludes: “We’re going to have an absolute Biblical collapse of our standard of living, and no one even has a clue that it’s coming.”
Oh, and one last note. The current 1980 inflation adjusted all time high for silver is $601 according to John Williams at Shadowstats. And that doesn’t account for all of the paper metals fraud in the system. Please bear that fact in mind as you consider what life may look like after the collapse of the Petro Dollar’s purchasing power.
I should have checked context accuracy more closely.
Gee I forgot to add that hair on fire noise was from Sept 2015. If you followed that you would have missed out on the epic Trump stock market rally, epic real estate rally, epic bond rally. After 2008 tbe same dead wrong yap.
I dont have much gold, but I would be happy with $600 silver
Even $500 silver would be a-ok with me.
Unfortunately it is not going to happen in my lifetime.
Why do you say that? Obviously you have not been reading enough of these $29.95 newsletters from the commission collecting gold and silver shills.
I have been reading some of their stuff since I saw silver hit 20 in the late 90s.
they are mostly worse than broken clocks.
I liked this one guy called “the left handed economist”
but he died. (he was called that cause he did not like all the shills saying ‘on one hand, but then on the other...’)
I remember being stuck in the Copenhagen airport due to some plane issues and seeing the huge headlines “Silver hits $50/oz but by the time I got back to US it had dropped off a cliff
I can generally tell which ones are lying shill carnival barkers and which ones are just ignorant.
Debasement of their currency led to the fall of Rome.
True. Add to that the greenies and socialists making their policies.
Information on the purchase of gold by the Bank of Russia on the domestic market
March 25, 2022
Press release
In order to balance supply and demand in the domestic precious metals market, the Bank of Russia will buy gold from credit institutions at a fixed price from March 28, 2022. The price from March 28 to June 30, 2022 inclusive will be 5,000 rubles per 1 gram. The established price level makes it possible to ensure a stable supply of gold and the smooth functioning of the gold mining industry in the current year. After the specified period, the purchase price of gold can be adjusted taking into account the emerging balance of supply and demand in the domestic market.
When using the material, a reference to the Press Service of the Bank of Russia is obligatory.
http://www.cbr.ru/press/PR/?file=25032022_192430DKP25032022_182539.htm
This is from Russian Central Bank, translated to English.
Also:
Russia is open to accepting bitcoin for its natural resources exports, the chairman of the country’s Congressional energy committee, Pavel Zavalny, said in a press conference on Thursday.
Zavalny explained that Russia is open to accepting different currencies for its exports, beginning with natural gas, depending on the buyer’s preferred method of payment. However, the chairman said terms will depend on the importing country’s foreign relations status with Russia.
“When it comes to our ‘friendly’ countries, like China or Turkey, which don’t pressure us, then we have been offering them for a while to switch payments to national currencies, like rubles and yuan,” Zavalny said during the press conference. “With Turkey, it can be lira and rubles. So there can be a variety of currencies, and that’s a standard practice. If they want bitcoin, we will trade in bitcoin.”
https://bitcoinmagazine.com/markets/russia-open-to-sell-gas-for-bitcoin
” because the bullet travels faster than the speed of sound.”
Maybe it was a .45.
Thanks, Rusty.
I like the idea of trading in "favors" (you scratch my back, I'll scratch yours).
What a mess Russia just created for itself. Accepting payments of either bitcoin or Turkish lyra is nuts. Wildly unstable cuurencies. Now Russia will not really know what they will be getting paid in the future. And the gold peg just puts the ruble back at its weak prewar price of roughly 1.4 cents per ruble. If the dollar strengthens then gold will fall and along with it goes the ruble.
It`s so obvious even a brainwashed leftist should be able to see it.
True.
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