Gosh!! Germans Saudis Russians Chinese. Like spy novel…
Bill Holter, on the continuing saga of the death of the uSA dollar
(courtesy Bill Holter/Miles Franklin)
(courtesy Bill Holter/Miles Franklin)
Changing teams?
The past week was packed with news of all sorts. We had news out of the Ukraine where a couple of cease fires ended before they started. The British scrambled fighter jets against Russian aircraft. ISIL marched through Iraq slaughtering 1,000’s including the judge who sentenced Saddam Hussein to death. There was a Fed meeting along with “end the Fed” riots in Germany of all places. Shanghai announced that their physical gold exchange would go live in the 4th quarter (do you wonder at all about the timing of this?) and the “missing collateral” situation for base metals has begun to spread. Lots and lots of big news but one “little” piece of news caught my attention more than anything else.
TASS announced on Friday that Russian foreign minister Sergei Lavrov would meet with Saud al Faisel, the Saudi’s foreign minister. http://en.itar-tass.com/russia/736939 It was reported that the two would speak about the situation in Syria, Iraq and also “energy”. Why did this piece of news stick out at me like a sore thumb? For several reasons, first, Russia and Saudi Arabia have had opposing views on Syria. Saudi Arabia would like to see the Assad government fall so that a pipeline could be constructed and the Russians if you recall supported Mr. Assad back in the fall when president Obama was about to unilaterally bomb them. I believe that Russia and Saudi Arabia are also on separate sides when it comes to what is happening in Iraq. Mr. Putin has publicly pledged support of Iraq’s leader Mr. Maliki while ISIS are Sunnis with the support of the Saudis. This part we know about, the talks on “energy” in my opinion are the most interesting part and I’ll explain why.
I have no information whatsoever to prove what I am about to write, it is strictly my opinion but I think that it makes sense. We do know that China and Saudi Arabia have been busy doing energy deals. We also know this of China and Russia together. As Russia and Saudi Arabia have “differing views”, it would not surprise me if China was the one who set up this “date” between the two “to make nice” with each other.
China knows that Saudi Arabia’s stance of only accepting dollars for oil is THE ONLY thing left holding up the dollar. If you look at what China has done and of course what Russia is doing, they are preparing for (actively promoting in the case of Russia) a “de” dollarized world. I believe that China knows that the dollar will lose reserve status one way or another, with or without Saudi Arabia being the one who pulls the plug. I think that the Chinese want this to happen cleanly and without bickering between two of their partners, Russia and the Saudis. It is important to understand the Eastern mentality here. Getting the job done is most important, however, how it looks publicly is also important. If the Russians and Saudis can somehow bend their views and come to agreement (or just agree to disagree because they were told to) then the stage is almost 100% set.
I have said many times that when Saudi Arabia announces that they will accept currencies (or gold?) other than dollars, the Western financial system will probably fall within a two week time frame. If Saudi Arabia were to announce that they would no longer accept any dollars from the U.S. or anyone else, this time frame tightens up to “overnight” in my opinion.
If you look at this from a distance, China has done everything they needed to do to make ready for the dollar being abandoned. They became the largest creditor to the U.S., our “banker” in other words. They have built out infrastructure, plant and equipment and done so “on credit” in many cases. They have scoured the globe and made deals where they have tied up the future supply of many commodities and done so by promising to pay dollars in many cases. This way they can “spend” some of their hoard and get something real in return. They have the ability to make our interest rates rise by selling their Treasuries and it appears that they have already imported much of our exported gold. Yes, they have had talks and done supply deals with Saudi Arabia but there is one thing missing.
The missing “player” to the team is Saudi Arabia. Yes Saudi Arabia trades with China but they are still as of now on “America’s team”. If I had to guess, Mr. Lavrov is probably pledging Russian military “protection” if the Saudis changed teams. In my opinion the Saudis already know exactly what Mr. Lavrov will (or has already) propose because it is what the Chinese desire. The Chinese need Saudi Arabia for their energy supply yes but more importantly they need them to torpedo the dollar. “Publicly” if the Saudis make an announcement of accepting other currencies then the Chinese cannot be blamed for blowing up the West’s financial system. In fact, the Chinese can say “hey, we took a beating on our Treasuries, we are the ones who got stiffed!”. Publicly, the Saudis can say something like “we already have too many dollars, we wish to diversify”. In this manner, it will look to the rest of the world as logical. Do you see what I am saying here? The Chinese know the end game but they do not want to arrive there “ugly”. They are a dignified people and appearance is very important to them. Don’t get me wrong, they are fierce business people willing to fight it out but the appearance of “how” they do business is very important to them.
Again, as I said above, this is my opinion. I have no fly on the wall or inside information at all but this does make sense to me now that a top level meeting between Russia and Saudi Arabia has occurred. It is my opinion that on any given day the Saudis will announce that they are “changing teams”. I would suspect that they will do this in a very dignified manner just as Mr. Putin has handled the Russian foreign affairs. I don’t think that there is any chance that the Saudis will initially “shun” or refuse dollars. They won’t need to, they will wait to see what happens. “What happens” as in how badly the dollar falls from this news. They may only need to wait a very short time before others begin to refuse the dollar, in this manner they can simply exit the dollar with the rest of the crowd…rather than being the ones screaming fire in an over populated dollar crowd. Regards, Bill Holter
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Bill Holter, on yesterday’s story that the German’s do not want their gold back as they are very happy with the USA safekeeping
(courtesy Bill Holter/Miles Franklin)
“Fuggedaboutit”…please?
Well, well, well… the Germans don’t want their gold back any longer. They kinda sorta did in Dec. 2012 and expected something like 42 tons per year for 7 years to get 300 of their 1,500 tons from the FRBNY. That didn’t work out so well since they only received 5 tons last year …and it was reportedly not even the same gold that was originally deposited because the bars that were delivered were “recast”…but at least it was gold. We were told that they were recast because of the “impurities” that needed to be removed. Really? Is gold really like bread that molds over time and grows “impure”? The Bloomberg story of “How the Germans don’t want their gold back” (my quote) is here
OK, I’m sorry but this stinks to high heaven. No I did not graduate from an Ivy League school or a white shoe University like Oxford so I was never let in on the wink, wink, pinky swear secret handshake of the elites. Maybe it is considered “gentlemanly” not to turn in or squeal on one of your own even if it involves theft from your own countrymen. Think this one through for a moment, Germany asked for their gold back. Not all of it mind you, only 10% of their total and just 20% of what the Federal Reserve was supposedly holding…and only received a whopping 5 tons which equates to less than 2%.
Let’s put this in street terms, 40 years ago you gave your friend (a local businessman with a good reputation) Louie $1,500 to keep safe because you didn’t trust the banks. You never really needed the money but every once in a while you would buy him a beer and pull him away into a corner at the local bar and ask him if the money was still safe. Every time you asked him he told you “as safe as could be” so you never really worried about it. But then one day you hear how Louie’s partner Sam asked for his money back but then a few weeks later Sam was found dead in a car trunk. Then the same thing happens again twice to Monty and then to Hugo, they are also found dead so you start scratching your head because these are all sort of similar …but then it happens. You find out through the grapevine that their houses were burglarized DURING the funeral and each one of the widow’s was heard saying that everything was busted up and the “cookie jar” was missing! Aha! Do you get it yet?
OK so I’ll finish the story for you. After hearing about this you “tip toe” up to Louie and ask him if it’s OK to have the $1,500 back? Louie grunts and growls a little bit so you back off and say “how about $300”? After asking a few questions meant to put you off, Louie agrees to give you the $300 over the next 7 years. The only problem is that after the first year he only gave you $5 back AND asked you to buy him a beer…and something else is a little bit strange. The dollar bills that you gave him were so old that they were “gold certificates” and had old serial numbers on them, you didn’t remember the numbers but you knew they were early numbers. The strange part is that the dollar bills you got back were new ones. They smelled new, the bills were crisp and even “better” than the ones you gave Louie to begin with. They even said “Federal Reserve Notes” on them. Hey wait a minute, these aren’t the bills I gave Louie all those years ago! Do you see what happened?
Now you are in a pickle, Louie is walking down the street cussing and swearing at everyone and even gives out a few beatings on the way. He finally walks up to you and says (not asks) “hey Angelo, you still need all that money back or is it OK if I still keep it safe”? What are you going to say to him? Oh and I forgot, you and Louie are also business partners in several restaurants around town that aren’t doing so well anymore. If you put the word out on the street that Louie is a welcher or a thief, people might wonder about the food quality and then your other restaurant investments go down the drain.
Let me explain this for you and I will add that it is in “my opinion” so knuckleheads like Jeff Christian cannot yell “liar liar pants on fire”. “In my opinion”, the German gold is gone, LONG gone! They will never get it back. They know it, the Fed knows it and I hope that you know it too. We stole it. We sold it. Maybe even 10 times over…or 100? The Germans cannot say anything at all about it because their banks are just as leveraged or even more so than ours are. If they open their mouths… the entire system will be exposed as a fraud. The entire system will collapse, there will be violence, chaos and loss everywhere you look. Period, end of story and extremely simple. “We” knew this 17 or 18 months ago when the story first broke that Germany wanted their gold back but could only get 20% of it …over 7 years…and now they only got 2% and suddenly they don’t want it anymore. Could the story get any better?
I have to ask, do “they” (the German and American powers that be) really believe that ANYONE could be this stupid? Do they really believe that ANYONE believes ANY of this story? No, they do not. What they do know is that this (as well as other situations) is an example of “MAD” (mutually assured destruction) if they are recognized. So, very simple, just “don’t recognize them”. Tell a happy story that Bloomberg can print…and then just forget about it. “Fuggedaboutit” because the average person will forget about it and only the tin foil hat society will ever even mention it …and they are crazies anyway and no one listens to them! Gold should be up $200 on this news and never to look back but it’s not because it is still “under control”. If you know anything about poker then you know that you cannot bluff on every single hand because sooner or later your bluff will be called!
I penned this piece last evening and thought that it was finished but a little more comedy has come out since then. The head of German gold repatriation has come out and responded to the Bloomberg article
Peter Boehringer now says that the article is a false headline, that he is taken out of context and old news. His response sounded to me (but I am a jaded nut job) like he protests too much and that “they really didn’t want their gold back in the first place”. If I were a reporter and had the chance to ask just a couple of questions I would ask: what has changed? Why the about face and especially since you didn’t get your promised 42 tons…which turned out NOT to be the gold that you deposited in the first place? Who is holding a gun to your head?
One last thought, the Bloomberg article quotes Norbert Barthle, the spokesman for the CDU (Angela Merkel’s Christian Democratic party) as saying; “The Americans are taking good care of our gold,”
Objectively, there’s absolutely no reason for mistrust.”.
Umm, no reason for mistrust? I’m almost speechless (that almost never happens)! How about simply because you are in essence saying “trust me”? How about the above mentioned facts that they only received 5 of a promised 42 tons for the year 2013 and the fact that it wasn’t even the same gold? Have they really stooped so low as to answer with the tried and true response of a 5 year old…”BECAUSE”? Let me finish with this, “they” must think that either they are so smart or that “we” are so dumb…”they don’t need no stinkin’ common sense” because whatever they feed us we will consume. Regards, Bill Holter
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