Mystery gold buyer? Unlikely bed fellows.

•December 3, 2014 • Leave a Comment

As we head into the tail end of 2014, today an acclaimed money manager spoke about the historic trading in the gold, silver, and oil markets.  Stephen Leeb also discussed a mystery buyer who propped up the gold market and took on and eventually crushed all paper shorts after Sunday’s vote in Switzerland.

Leeb:  “What caught my attention was the trading in the gold market on Sunday evening (early Asian trading).  This trading followed the huge fall in oil and oil stocks on Friday.  It also followed the no vote in Switzerland.  But after gold’s initial decline on Sunday evening, gold just straight-lined for what seemed like 6 hours.  Some entity was in there buying every ounce of gold that was being offered for sale….

“And that entity continued to buy every ounce of gold available until the gold market then began to reverse course and rally in a huge way.  This rally was happening even with what seemed like every possible negative news item in place.  So the gold market surprised many people.

And in the midst of the plunge in oil prices, China has ramped up their purchases and is storing the excess crude anywhere they can.  China has also begun doing military drills with Iran and they strengthening their relationship with Saudi Arabia.

At the same time, India’s leader, Modi, has decided to invest in Russia’s energy industry.  This is a huge slap in the face of the United States for Modi to be negotiating with Russia.  So what you are seeing here, Eric, is a coalescing of the East.  And for what it’s worth, China is getting what it wants.  They are getting a strong Eastern bloc and a Silk Road, plus Germany, together.

What the Chinese now have to demonstrate is that they can protect Saudi Arabia.  This has been America’s strong suit — their military and their ability to protect the flow of Saudi oil.  I mentioned earlier about the Chinese and Iranians conducting joint military exercises.  Well, the Saudis must feel, with ISIS staring at them, that China, Russia, and Iran, will be able to protect them.  That’s a really big deal because it allows the Saudis to turn their back on the United States and side with China.

The other thing that China has to demonstrate is that their monetary system is transparent.  So China has announced they are going to start insuring yuan deposits in their banks.  All of this is making the Saudis look at Russia and China and the way they are conducting their energy trading in yuan, not dollars.  Soon the Saudis will look to trade their energy with China for yuan or a combination of yuan and gold.  Once China reveals how much gold they really have, they will sew up total hegemony in the East.

There is very little doubt that this is the game being played.  This is why you are not seeing gold crumble right now, because it’s looking ahead to a point of inflection.  And I strongly believe that it was the Chinese who were the mystery entity buying every single ounce of gold available in early Asian trading on Monday.  The Chinese want the gold.  So we are now on the cusp of very big things happening and all of it will be to the benefit of gold.

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Just exactly who is wagging who’s tail!

•November 28, 2014 • Leave a Comment

Grandmaster Putin Sets His Gold Trap

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By buying up at a cheap price the world’s supply of physical gold he puts the US and Europe in an impossible economic situation

Dmitry Kalinichenko

  OPINION  Mon, Nov 24 | 3007  26

Gold coins: Russia’s economic secret weapon?

This is the second of two articles we are publishing, the other being an articleby John Butler published in the US by David Stockman’s Contra Centre, that speculate on Russia’s use of its accumulated gold reserve in a currency war with the US.  This article gives a more Russian take on the same subject.

This article was published at the popular Russian investment blog Investcafe.ru last week has been a runaway success in Russia, receiving 200,000 views so far, which are increasing steadily.

Though the two articles are written in a very different way, they both have several themes and ideas in common.  Both have also obviously been triggered by the recent gold buying spree of the Russian Central Bank.

The essential idea in this article is that the Russians and the Chinese have quietly switched from the US dollar to gold in their foreign exchange reserve holdings, with both countries supposedly immediately converting the US dollars they are paid for their exports into gold, which they then store in place of US dollars and US Treasury bonds in their reserves.  

By doing so, according to this theory, the Russians and Chinese have effectively already stopped treating the US dollar as the world’s reserve currency and are in effect substituting gold in its place.  

At the same time, by buying up the bulk of the world’s limited supply of physical gold at its currently artificially low price, the Russians and the Chinese are supposedly putting the western powers in an intolerable economic position as the US dollar loses its reserve status and the US and the Europeans find they have insufficient quantities of physical gold in their reserves to pay for their imports.

In a less sophisticated and more belligerent way, it too like John Butler’s article, is a call for Russia to return to the gold standard, which it even claims is surreptitiously already happening. 

Like the John Butler article, only more so, this article also treats a return by Russia to the gold standard as an attack on the reserve status of the US dollar.

In our opinion, there is little or no prospect that Russia will go on to the gold standard any time soon or even at all.  Since Russia actually benefits from having a freely floating currency we cannot see why it would want to do so.  

As for the large purchases of gold made recently by the Russian Central Bank and by other Asian Central Banks, we suspect they are simply down to these banks seeing a good buying opportunity because of the currently low gold price.

This article nonetheless gives a good insight into the way non-elite Russians think about these questions.

This is an edited version of an article that first appeared in English translation on the Fort Russ blog.


Central banks of all countries of the world have purchased 93 tons of the precious metal in the third quarter of 2014. It was the 15th consecutive quarter of net purchases of gold by Central banks. Of the 93 tonnes of gold purchases by central banks around the world during this period, the staggering volume of purchases – of 55 tons – belongs to Russia.

Not so long ago, British scientists have successfully come to the same conclusion, as was published in the Conclusion of the U.S. Geological survey a few years ago. Namely: Europe will not be able to survive without energy supply from Russia. Translated from English to any other language in the world it means: “The world will not be able to survive if oil and gas from Russia is subtracted from the global balance of energy supply”.

Thus, the Western world, built on the hegemony of the petrodollar, is in a catastrophic situation. In which it cannot survive without oil and gas supplies from Russia. And Russia is now ready to sell its oil and gas to the West only in exchange for physical gold! The twist of Putin’s game is that the mechanism for the sale of Russian energy to the West only for gold now works regardless of whether the West agrees to pay for Russian oil and gas with its artificially cheap gold, or not.

Because Russia, having a regular flow of dollars from the sale of oil and gas, in any case, will be able to convert them to gold with current gold prices, depressed by all means by the West. That is, at the price of gold, which had been artificially and meticulously lowered by the Fed and ESF many times, against artificially inflated purchasing power of the dollar through market manipulation.

Interesting fact: the suppression of gold prices by the special department of US Government – ESF (Exchange Stabilization Fund) – with the aim of stabilizing the dollar has been made into a law in the United States.

Right now the West spends much of its efforts and resources to suppress the prices of gold and oil. Thereby, on the one hand to distort the existing economic reality in favour of the US dollar and on the other hand, to destroy the Russian economy, refusing to play the role of obedient vassal of the West.

Today assets such as gold and oil look proportionally weakened and excessively undervalued against the US dollar. It is a consequence of the enormous economic effort on the part of the West.

And now Putin sells Russian energy resources in exchange for these US dollars, artificially propped by the efforts of the West. With which he immediately buys gold, artificially devalued against the U.S. dollar by the efforts of the West itself!

But Putin uses these dollars only to withdraw physical gold from the West in exchange, for the price denominated in US dollars, artificially lowered by the same West.

The idea of this economic golden trap for the West, probably originated not from Putin himself. Most likely it was the idea of Putin’s Advisor for Economic Affairs – doctor Sergey Glazyev.
China recently announced that it will cease to increase its gold and currency reserves denominated in US dollars. Considering the growing trade deficit between the US and China (the current difference is five times in favor of China), then this statement translated from the financial language reads: “China stops selling their goods for dollars”.

The world’s media chose not to notice this grandest in the recent monetary history event. The issue is not that China literally refuses to sell its goods for US dollars. China, of course, will continue to accept US dollars as an intermediate means of payment for its goods. But, having taken dollars, China will immediately get rid of them and replace with something else in the structure of its gold and currency reserves. China will no longer buy United States Treasury bonds for dollars.  China will quietly replace and de facto is already replacing them with Gold.

Using the mechanism of active withdrawal from the market of one artificially lowered by the West financial asset (gold) in exchange for another artificially inflated by the West financial asset (USD), Putin has thereby started the countdown to the end of the world hegemony of petrodollar. Thus, Putin has put the West in a deadlock of the absence of any positive economic prospects.

The West can spend as much of its efforts and resources to artificially increase the purchasing power of the dollar, lower oil prices and artificially lower the purchasing power of gold. The problem of the West is that the stocks of physical gold in possession of the West are not unlimited. Therefore, the more the West devalues oil and gold against the US dollar, the faster it loses devaluing Gold from its not infinite reserves.

At the current rate of reduction of reserves of physical gold, the West simply does not have the time to do anything against Putin’s Russia until the collapse of the entire Western petrodollar world. In chess the situation in which Putin has put the West, led by the US, is called “time trouble”.

The Western economic establishment can see and understand the essence of the situation. Leading Western economists are certainly aware of the severity of the predicament and hopelessness of the situation the Western world finds itself in, in Putin’s economic gold trap. After all, since the Bretton Woods agreements, we all know the Golden rule: “Who has more gold sets the rules.” But everyone in the West is silent about it. Silent because no one knows now how to get out of this situation.

If you explain to the Western public all the details of the looming economic disaster, the public will ask the supporters of a petrodollar world the most terrible questions, which will sound like this:

How long will the West be able to buy oil and gas from Russia in exchange for physical gold?

And what will happen to the US petrodollar after the West runs out of physical gold to pay for Russian oil, gas and uranium, as well as to pay for Chinese goods?

No one in the west today can answer these seemingly simple questions.

And this is called “Checkmate”, ladies and gentlemen. The game is over.


Translated by Kristina Rus

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A Most interesting “take” on current events…

•November 25, 2014 • Leave a Comment

Is COMEX Being Cornered?

It is with a deep sense of gratitude that I have had all of you as friends and associates during what has been a long war, not a good war, but a very long “financial war.”  As you know from these writings; this has been a war conducted by the Federal Reserve against the entire world, aided and abetted by major international banks via the manipulation of most every market on the planet.  The ethics and morals our country was originally built on …be darned!

The events mentioned herein relative to the suppression of gold and silver using dollar hegemony as the tool indicate a major international monetary crisis is dead ahead, this is obvious.  Power in the hands of the few have made massive gains for those at the top of the economic ladder while the average man has become a debt slave to the few.  There are of course the laws of Mother Nature and “unintended consequences”.  Those at the top who intend to “rule the world” are being challenged from the East in what I believe to be almost a winner take all “war.”  It did not have to be this way but the “West” has forced this.

I have never written “this is my most important writing ever!” but that day has now come.  So many events have all aligned at once which point to something very bad happening, very soon.  In fact, “very soon” could be as soon as the Monday following this Thanksgiving.  We saw many different events unfold over this past week which I believe are all connected in one way or another, I will try to connect them for you.  That said, please understand that we are and have been in a financial war for many years now.  This “war” is one between the East and West where the West’s paper financial system which has been in control for so many years is seeing its power wane.  It is this “wane” of the West versus the rise of the East that I believe is now, finally coming to head.

If you recall, we had two Fridays in a row where gold and silver prices were smashed early in the overnight hours and into the morning, only to turn around violently and close very strongly for the day and the week.  This action is called an “outside reversal day” which over the years has been an extremely rare event in the precious metals.  It has been rare in precious metals because it was not “allowed.”  When I say “allowed,” please remember that COMEX is a paper exchange where possessing metal is not necessary to sell gold or silver.  All you have to have is “money” to post as margin and you are allowed to sell as many contracts as you have margin for.  There are “limits” to how many contracts one can buy or hold, these limits do not seem to have been enforced on the sell side …JP Morgan’s short position in silver as an example.

So we had two outside reversal Fridays in a row, this was followed by the action this past Wednesday.  80 tons of gold was sold over a 15 minute timespan which knocked gold down $20 in the blink of an eye.  Please see the chart below courtesy of Dave Kranzler of IRD.

Dec Comex Graph

80 tons!  Let me put this in perspective.  80 tons is equal to two weeks’ worth of global gold production …sold in just 15 minutes!  This is nearly 2.8 million ounces. The interesting thing is COMEX only claims to have 865,000 ounces of gold available for delivery so more than 3 times the amount of ounces were sold in 15 minutes than is even claimed as available for delivery! What followed however was the real stunner, very shortly afterward gold dug in its heels and started to recover …recover to unchange in price!  Do you see the importance here?  Though this was not another outside reversal day, it may have been even more important.  The “paper” market absorbed two weeks’ worth of production in just 15 minutes without breaking!  I’ll get back to this shortly and tie it in to the rest.

If you recall, I wrote a piece back in August entitled “Kill Switch“ where I put forth a hypothesis that the high and rising open interest in silver was actually the Chinese via proxies cornering the silver market.  The huge open interest in the nearby contract rolled out to the December contract.  At that point, the open interest in gold was at multi year lows as one would expect with prices down.  This has changed, just over the last 4-6 weeks, the open interest has steadily built in gold …while continuous pressure still on the price.  Before going any further, I have never seen the open interest rise to multiyear highs while the price was pushed to multi year lows in ANY commodity.  This is truly an anomaly and one that looks like it could be resolved very shortly.

This coming Friday is the 1st notice day for both Dec. COMEX gold and silver contracts.  COMEX in my opinion has a potentially huge problem where a default in both contracts is a distinct possibility!  As of this past Friday, 61,763 contracts still open, this represents 308 million ounces of silver.  The COMEX claims a registered (deliverable) inventory of just under 65 million ounces.  With only four days left there are roughly 5 silver ounces contracted for every one ounce available!

The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold.  The “registered” (deliverable) category at the COMEX inventory shows only 868,910 available to deliver!  Do you see the problem here?  There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available!  I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday?  This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, “FRAUDULENT” in capital letters!

Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory.  Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is.  It is also astounding that total open interest could have risen to these levels while the price dropped.  For open interest to increase and the price to drop, the “initiation” to the opening of contracts has obviously been done by sellers.  This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts …but now there is a problem.  So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver.  Put another way, COMEX gold and silver look like they have been cornered!  Let me rephrase this, COMEX gold and silver are now “very cornerable.”  We will know shortly if this is true and “who” did the cornering.  I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds.  I think we will find out they in fact did play by the West’s rules and it was the “sellers” of nonexistent metal who fell into their own price fixing trap.  It has been a financial war, one that was declared by the West and looks to have been possibly won by the East.

Another huge event this past week was the surprise announcement by Holland of their repatriation of 122.5 tons of gold from the FRBNY.

I have many questions about this transaction and very few answers.  We may or may not ever get some of the answers but here is what I’d like to know.  Was the gold which was delivered the “original” gold that was deposited?  Same serial numbers and hallmarks?  If not, where did it come from, who refined and processed it?  And when?  One must also wonder why the Germans did not get their promised gold.  Did Holland work out a deal prior to the German request?  Or is this a case of the Dutch “smelling smoke” and quietly exiting the theatre before anyone else?  Other questions might include whether or not any of this gold was of Ukrainian origin and now what might happen in the derivatives markets?   Remember, derivatives outstanding are probably in the range of 100-1 versus the real metal, taking 122 tons of “collateral” away could affect 12,200 “tons” of paper derivatives.  With the leverage factor, this is equal to better than 4 years’ worth of global production and could affect close to $1/2 trillion worth of paper contracts!  While on this subject, prior to the Dutch news, GOFO rates were at almost record backward levels.  Has this come about because 122 tons of “collateral” was withdrawn from the pool?  Just thinking out loud here…

Other notable events this past week were many.  First, Congress began questioning the banks on “manipulating the commodities markets,” and the Federal Reserve leaking inside information to Goldman Sachs, is the timing of this a coincidence?  Also, President Obama unilaterally has now thrown our borders open, is it possible that the long spoken of “Amero” is really in the works?  One necessity to a North American currency unit would be open borders right?  Again, just thinking out loud.  We also heard Russia announce a decline to import ANY GMO food products from the West for at least 10 years.  They also announced the import of another 55 tons of gold for the quarter for good measure while ISIS announced their intent to use gold and silver as money.

To tie all of this up, let me say that I believe the very long anticipated “market corner” of precious metals may possibly and finally be at hand.  Contrary to what happened back in the late 1970′s with the Hunt brothers in silver, the current “corner” was actually facilitated by the sellers.  The Hunt’s in fact did set out to corner silver, I don’t believe the Chinese/Russian/Indian alliance initially set out to do this …they were “forced to.”

You see, we have been in a “financial war” for years, the U.S. has trod heavily on the rest of the world financially.  We settled our grotesque annual trade deficits by sending freely created dollars as payment.  In order to support the dollar and keep interest rates low, we have suppressed the prices of gold and silver.  Without low metals prices, none of the other markets could ever make any sense.  PE ratios could never be at the current levels without low interest rates, interest rates could never be at these low levels if gold and silver were shooting upward …so the rest of the world has played the only card they could to prevent a World War, a financial card.

They “carried” us and let the game go on and on as they accumulated bigger and bigger stacks of gold.  Much of this gold “was once” Western gold.  They have legally purchased it and in many cases sent our own dollars back to us as payment.  Now, we will sit with lots and lots of dollars while they have lots and lots of gold.  I believe they have now cornered both COMEX gold and silver if they choose to stand for delivery.  They will say “hey, we did not make up the rules, you did.  You sold us contracts, we bought and paid for them.  Now we would like the contract settled, please send us our metal”.  This was all legal and they did not step up with the intent of busting the market, they simply “bought what we were selling.”  If they do stand for delivery, can they be faulted if they ask for the contract they paid for to perform?

Let me finish by saying this, we very well may wake up after Thanksgiving “fat and happy” only to find out the entire financial system was a fraud.  The East, by asking for delivery may in a “polite” way expose the entire game.  This would accomplish much, first and most importantly, this will go almost all the way in ending the dollar as the world’s reserve currency.  The U.S. will no longer be able to trade “something for nothing.”  It will also hamper our ability to financially and militarily put our thumb on the rest of the world.  If we became hampered financially, this would also make military operation much more difficult to fund or pay for.  In essence, if I am correct and we do see failure to deliver and a COMEX default …the world may be a safer place!  This past week for example, President Obama secretly extended our stay in Afghanistan, how will this operation be funded by a bankrupt Treasury and a central bank that issues unwanted currency?  The Chinese/Russians in my opinion may be on the verge of winning a war without ever firing a shot and playing the game by our own rules!  We clearly have been the aggressors in both Syria and then in funding a coup in Ukraine.  Could crashing our financial markets be a way to put us on a financial leash and thus lessen our abilities at aggression?  I am sure this thought process has already been discussed.

Please do not call or write me Monday morning and say “see, nothing happened …again.”  All I am saying here it that the COMEX is now “cornerable” and in a very vulnerable position.  Maybe it will not be now, maybe it will?  All I can say is history is rife with “bank runs,” sooner or later the longs will stand for the delivery of an inventory too small to satisfy them, this will be nothing different than a bank run when it happens.

After a wild week of trading..

•November 24, 2014 • Leave a Comment

After a wild week of trading in which the Dutch announced the repatriation of 122 tons of gold, the man who made one of the greatest market calls in history sent King World News an incredibly powerful piece that warns the world is now on the road to what he calls a terrifying “Weimarization.  Below is the remarkable piece from Ben Davies.

November 24 (King World News) – The Entire World Is On The Road To A Terrifying Weimarization

Overview of “Bubbleology”

On the 12th November 2014 – some 10 years after it was launched – lander module Philae which accompanied the Rosetta spacecraft touched down on Comet 67P/Churyumov-Gerasimenko (67P) to begin extra-terrestrial scientific observations. The on-board telemetry communicated back to Earth some 28 light-minutes away revealed that the lander had bounced twice off the surface of 67P. The first bounce may have lasted two hours and over 1 kilometre and is considered the largest space bounce in history which we would put it on a par with the incredible bounces in the US and Japanese stock markets this past month!

Back here on Earth Japanese monetary policy has similarly taken a giant leap forward for mankind by conducting its own scientific experiment. On the 31st October 2014 Bank of Japan Governor Kuroda-san implemented an addition to his ‘Qualitative & Quantitative Easing’ (QQE) policy begun a year ago. The surprise event was less the timing and magnitude but the clear brazen coordination of monetary and fiscal policy using the conduit of the Japanese Government Pension Fund to implement it. The QQE drove stock markets into a frenzied rally.

Central banks have been conducting a seemingly coordinated financial program of unconventional monetary policy – assuringly scientific in its nomenclature of QE and QQE – media commentators marvel at the boldness (stupidity) of policymakers ‘to go forth where no man has gone before’ and eradicate the spectre of debt deflation.

Policymakers have been studying and implementing ‘Bubbleology’ – the science of bubble money. The impact of this earthly science on both economies and financial markets has been truly dismal. It is clear it is creating a divergence between economic and financial reality.

Far from eradicating the perils of debt deflation it is clear this program has merely initiated more fiscal and private sector balance sheet irresponsibility, as both continue to lever up. The capital (‘near money’) allocation of such leverage has resulted in rising asset classes, primarily housing stock, equity and bonds where the pursuit of yield has ignored all credit risk sensibilities. All this has occurred at the expense of daily living standards and the misdirection of capital.

We are witnessing the continuation and completion of the financialization of our economies and markets which began at the instigation of governments and central bankers in the years leading up to the 2008 crisis. There is no attempt to foster sustainable capital and income through innovation and production which ultimately drives healthy employment.

Rather financialization of asset classes driving elevated prices which creates an inequality of wealth, albeit illusionary wealth. Land, housing stock and excessive equity price growth in reality drains productivity away from entrepreneurship and the employment which enables sustainable taxable income for nations to run prudent fiscal surpluses.

We are in the butterfly vortex of a momentary illusion of ‘hyperinflated’ wealth – for the value of money is sinking rapidly – destroying the purchasing power of the global majority. Markets have a memory and from the first moment central banks expanded their balance sheets the flap of Lorenz’s wing has cast a shadow over financial and economic stability.

I offer a stark warning. This next week could well prove to be a historic turning point in the efficacy of money printing. The market herd has fully committed itself to the ‘Weimarization’ of equity. ‘Weimarization’ is the phrase I coined to refer to the rapid rise in equity markets as a consequence of monetary reflation. I first documented the potential of rapidly rising US and Japanese equity markets in our HindeSight Letter Nessun Dorma – None Shall Sleep in January 2011.  And how markets have rallied but I firmly believe despite the inherent danger of fighting trending, debasing equity markets, now is the time to realize that the risk of a cascade lower in stock markets is very high. We are reaching a point of criticality.

When the herd is committed and the ‘money bubble’ potion  has been fully drunk for now, it is time to be contrarian. This past few weeks Japan, China and the ECB have infused the markets with another dose of their elixir and the Pavlovian response of investors ensures the pack is likely fully invested.

This recent melt up in the US stock market is a SELL.

And conversely it is time to BUY precious metals.

 

Also, for the first time I truly recommend BUYING gold mining companies, which we have had almost zero allocation to since 2012. This is our first buy recommendation since we recommended selling them in 2012.

In this HindeSight Investor Letter – Bubbleology – The Science of Money, I endeavour to highlight where the echoes of monetary history are manifesting themselves in systemic risk across the globe. To read the entire outstanding piece by Ben Davies titled ‘Bubbleology’ CLICK HERE. To listen to Ben Davies remarkable KWN audio interview CLICK HERE.

West weakens, East moving forward…..

•November 12, 2014 • Leave a Comment

Today an acclaimed money manager told King World News for the second week that we are very close to seeing one of the most dramatic reversals in any market in history in the gold, silver, and oil markets.  Stephen Leeb also said that one of these key markets will be a stunning 70 to 90 percent higher in 12 months.

Eric King:  “Stephen, last week you said we were close to one of the most dramatic reversals in history.  Friday was a big up-day for gold.  Yesterday and today we are seeing more volatility in the gold market.  What are you focused on right now?”

Leeb:  “Things are happening right now that no one would have ever believed.  For instance, Russia is now going to war with Ukraine — doing whatever they want — and no one is even blinking an eye because everyone knows there is absolutely nothing the West can do to stop Russia….

“Also, and this is very interesting, Eric, Hungary is led by a man who really believes the West is bankrupt.  And if you look at the Hungarian economy it is certainly outperforming the Germany economy, which is the best performing economy in Europe right now.  And Hugary’s leader really believes that the way to the future is going to be through economies like China, Russia, and Singapore.  These are economies in the East, not the West.  As I said, he thinks the West is simply bankrupt.

At the same time we are seeing Chinese President Xi saying that the China has $1.5 trillion they want to invest in the East.  They want to get the Silk Road reinstated and reinforce all of the trading relationships with everyone in the East, including Japan.  Who would have believed China and Japan would be growing closer?

The United States doesn’t have $1.5 trillion to invest in the East so there is no way they can compete with China.  This is why the yuan is gaining in prominence throughout the world, including places like Saudi Arabia.

If we look at Russia, the Russian unemployment rate is about 5.6 percent.  The people live very conservatively in Russia, and the Russian economy will struggle this year, but Russia is definitely not falling apart under pressure from the West.  And Putin’s approval rating is through the roof.  The Russian people don’t like getting pushed around and so they have rallied around Putin.

But Putin has clearly outmaneuvered the West during this entire crisis and now he is in a position to do whatever he wants in the Ukraine, and the West can do absolutely nothing to stop him.  Putin has made a very strong alliance with China, and China is busy making alliances all over the world.

What does all of this mean?  It means that a new day is dawning and investors will need to protect themselves.  I still maintain that the key day will come when you see major commodities priced in gold, or at least partially in gold and perhaps the yuan and a basket of other currencies.  We will probably see the ruble in that basket of currencies as well.

It is also interesting that during the decline in the price of oil China has been the largest buyer of oil.  It looks like they are using cheap prices to build their strategic reserves.  There is a very good reason the Chinese are buying a lot of oil at this time, because it’s not going to stay cheap.  Once companies close down fracking sites, it’s not going to be an easy thing to restart the fracking once again.

In fact, it wouldn’t surprise me to see the oil price 70 to 90 percent higher in the next twelve months.  This will be incredibly positive for gold and silver prices.  The world is changing and the power is moving to the East.  Gold and silver will dominate the financial landscape in the future.  Right now people are enamored with the stock market but that will change.  The change in psychology will be massive and incredibly dramatic and the best way for investors to be prepared for this change is to own physical gold and silver.  So to answer your question, yes, we are very close to one of the most dramatic reversals in history and we may in fact be witnessing the beginning stages of that reversal right now.”

The Yuan chipping/chunking away at the US Dollar..

•November 11, 2014 • Leave a Comment

Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada

The march of global de-dollarization continues. In the last few days, China has signed direct currency agreements with Canada becoming North America’s first offshore RMB hub, which CBC reports analysts suggest “could double maybe even triple the level of Canadian trade between Canada and China,” impacting the need for Dollars.But that is not the week’s biggest Petrodollar precariousness news, as The Examiner reports, a new chink in the petrodollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petrodollar system. As Simon Black warns, “It’s happening… with increasing speed and frequency.”

As CBC reports,

Authorized by China’s central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar.

Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.

“It’s something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there,” said CBC’s Catherine Cullen, reporting from Beijing.

Sovereign Man’s Simon Black has some ominous thoughts on Canada’s move…

It’s happening. With increasing speed and frequency.

The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.

China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.

Moreover, just today, hot off the presses, thecentral banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia.

This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.

And as Black notes, everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.

Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.

The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.

Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed.

Nothing goes up or down in a straight line. And given how volatile Europe and the global economy continue to be, the dollar may certainly be in for its surges and bumps in the coming months.

But over the long-term it’s glaringly obvious where this trend is going: the rest of the world no longer wants to rely on the US dollar, and they’re making it a reality whether the US likes it or not.

*  *  *

And now, no lesser oil-producing state than controversial Qatar has signed an agreement too.. seemingly opening up the door to Petrodollar panic… (as The Examiner reports)

The petro-dollar system is the heart and soul of America’s domination over the global reserve currency, and their right to make all nations have to purchase U.S. dollars to be able to buy oil in the open market. Bound through an agreement with Saudi Arabia and OPEC in 1973, this de facto standard has lasted for over 41 years and has been the driving force behind America’s economic, political, and military power.

But on Nov. 3 a new chink in the petro-dollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petro-dollar system.

While this new agreement between China and Qatar is only for the equivalent of $5.7 billion over the next three years, Qatar becomes the 24th nation to open its Forex market to the Chinese currency, and solidifies acceptance of the Yuan as a viable option for the future in the Middle East.

China’s central bank announced Monday that it has signed a currency swap deal worth 35 billion yuan (about 5.7 billion US dollars) with the central bank of Qatar.

The three-year deal could be extended upon agreement by the two sides,said a statement on the website of the People’s Bank of China (PBOC).

Also on Monday, the two sides signed a memorandum of understanding on Renminbi clearing settlement in Doha. China agreed to extend the RMB Qualified Foreign Institutional Investor scheme to Qatar, with an initial quota of 30 billion yuan.

The deal marked a new step forward in financial cooperation between the two countries, and will facilitate bilateral trade and investment to help maintain regional financial stability, the statement said. – China Daily

It is perhaps no coincidence that the term for the new agreement is set for three years, and is within the exact time frame being predicted by the director of the Finance Institute under the Development Research Center of the State Council, Zhang Chenghui for the Renminbi to become fully convertible in the global financial system.

The need for new markets and a more stable trade currency in Qatar could be tied to a new report issued last week by French bank BNP Paribas which showed that petro-dollar recycling has fallen to its lowest levels in 18 years, signifying that even oil producing nations in the Middle East are finding it difficult to trust the U.S. dollar, and facilitate its use in trade due to its depreciation since the advent of the Federal Reserve’s massive QE programs.

Nearly every week now, China, Russia, or one of the BRICS nations are finalizing agreements that supersede the old system of dollar trade and reliance on the petro-dollar system. And as many countries begin to reject the dollar due to the exported inflation that is growing in nations that are relegated to having to hold them for global oil purchases, alternatives such as the Chinese Yuan will become a more viable option, especially now that the Asian power has taken over the top spot as the world’s biggest economy.

*  *  *

The demise of Petrdollar flows…

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This is good layman explanation of what has been going on…….!

•November 8, 2014 • Leave a Comment

Today former US Treasury official, Dr. Paul Craig Roberts, gave a shocking interview to King World News covering criminal activity by the U.S. Federal Reserve.  He also discussed the outrageous action in the gold and silver markets, and why the West is so desperate.  Below is what Dr. Roberts had to say in this stunning interview.

November 8, 2014

Eric King:  “Dr. Roberts, there has been speculation about who is really behind this (most recent decline in gold).  You’ve talked about the bullion banks being agents for the U.S. government.  You were there at the US.. Treasury) when (President) Ronald Reagan called in people like you, David Stockman and others — it was to save the country (in 1980).  At that time there was a great crisis.  As you’ve watched this (recent decline) unfold, people wonder:  Who are they (the bullion banks) doing this for?”

Dr. Roberts:  “Eric, it’s clear, this is the Federal Reserve protecting the value of the dollar from quantitative easing and the massive increase in the supply of dollars and dollar-denominated debt.  Normally when a central bank creates 4 trillion new dollars the currency collapses….

Continue reading the Dr. Paul Craig Roberts interview below…

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“It’s not worth anything in terms of rubles, euros, yen, or (even) pesos.  This hasn’t happened (yet). …But it’s very obvious what they (the Fed) are doing.  And the consequences of it are also very dangerous because essentially what it means is that gold is being driven out of the West, into the hands of the Chinese, Indians, and the Russians.

But when the fiat currencies in the West get in trouble, there is nothing to back them with because all the gold is in Asia.  So the Fed, trying to save four big banks, it increased its balance sheet $4 trillion, and national debt in the United States increased 7 or 8 trillion dollars.  This puts pressure on the dollar.  The pressure shows up in the gold price and so they suppress the gold price.  That’s the story.  I’m convinced there is no other explanation.

Apparently these (agent) banks can print gold futures contracts in unlimited amounts, just as the Federal Reserve can print U.S. dollars in unlimited amounts.  And then in the space of a minute, two, three, or four minutes, dump the equivalent of 20, 30, 40 (or more) tons of gold as represented by these paper claims to gold into the futures markets during periods of essentially no trading.  The favorite time is around 3 o’clock in the morning EST.  It’s almost always when the Asian physical markets are closed.

That’s exactly what’s going on.  It’s illegal.  It’s not merely unethical — it’s strictly illegal.  But it’s being done by the authorities, or with their permission.”

Eric King:  “It sure doesn’t look like a bear market when you look at demand.”

Dr. Roberts:  “It’s not a bear market (in terms of demand).  As I’ve said, the demand for gold and silver has exploded.  For example, yesterday we had the U.S. Mint announce the suspension of sales of the silver eagles.  They announced the suspension of it because they don’t have enough supply to meet the demand — they can’t get enough silver to make the coins.

The same thing has happened in Canada.  The (Royal) Canadian Mint is now rationing the supply of silver maple leafs because the demand exceeds their ability to meet the market.  So the demand for (physical) gold and silver is not in bear territory.  It’s one of the greatest bull markets of all-time.  How can there be a bear market when you can’t even buy the coins?

It’s impossible for any economist to reconcile a situation in which the demand exceeds the supply — and the price is falling?  That can only be done because the price is established in a fake, phony paper market where you can control the supply by printing contracts.  It’s a way for the central banks to control the value of the fiat money by (artificially) driving down the gold price.

There is no other market in which something real is priced in a fake paper market.  So what you see happening now is all the people who said, ‘I’ve got to protect myself.  They are printing money, there’s going to be inflation, I’m going to buy gold and silver.’  They didn’t understand how the government could rig the price of gold and drive it down in the face of massive money and debt creation.

So they made a bet that was rational and they didn’t understand the desperate nature and corruption in the system.  And now that the government has consistently driven the gold price down from $1,900 to $1,100, they are demoralized — they’ve lost faith.  They say, “Oh, only if I’d been in the stock market.  Why did I buy this?  I’ve got to get out.’  And now they (some gold and silver investors) are selling their coins.  They are selling their coins at a time when their is a shortage of coins.

The U.S. Mint has stopped selling them because it can’t get the bullion to produce them, and the Canadian Mint is on the verge of having to do that.  Well, that’s not the time you want to sell.  The indication there is that the government has pushed this so far that there is a massive supply problem.

And what this policy has done is subsidized all the purchases of gold and silver in India, China, and Russia.  They’ve been able to buy at this rigged low price.  It’s like a subsidy.  This (suppression) policy, the people responsible for this should be arrested and put on trial.  This is a criminal policy.

And any economist should understand you can’t possibly have a bear market when the demand for bullion is exploding, the supply is constrained — and the price is falling?  That’s the opposite of supply and demand.  And so it has to be a rigged price.  Rigged prices are illegal, even if the authorities are behind it.”