I plan to report more about the New Orleans investment conference and in particular what Alan Greenspan had to say later in the week. Today I want to speak about several pieces of news from late last week which I believe were important. Though these are seemingly not “connected,” I believe there is a very strong connection for most of it but to this point only behind the scenes.
First, Russia reported the import of 1.2 million ounces of gold last month. This is a big jump from what they had been previously importing. Earlier in the year if I recall they were running some 300,000 ounces per month and they have now begun to increase this rate. Why is this significant you ask? Because Russia has been under U.S. sanctions for the last 3+ months. If the sanctions were truly biting and crippling Russia, they would not have the financial ability to import any gold at all, much less increase the amount dramatically. Maybe the Chinese are lending them a hand or Russia is acting as a proxy for Chinese buying? I have no idea but Russia increasing their imports of gold certainly was not what Washington envisioned as a result of sanctions I am sure. As a side note, we also got the weekly gold import numbers out of Shanghai. Another 50+ tons after 68 tons the week before, how much longer can China buy nearly ALL global production? The answer of course is until the Western vaults are empty.
Speaking of “empty vaults,” JP Morgan reported 321,500 ounces of eligible gold withdrawn from their vault last Thursday. This is interesting because it is now the 3rd time in the last two months JPM has had this exact 10 ton withdrawal. We do know that this is “kilo” gold and not “ounce” gold because of the reporting. Were it N.Y. or London style bars we would see a report of “._ _ _” because the 100 ounce and 400 ounce bars are never exact round number weights, they are “point, something something something.” In just the last 2 months, JP Morgan has seen over 75% of their eligible gold withdrawn and now stands under 500,000 ounces. Because the East buys and trades in kilos rather than ounces, this may be an Eastern withdrawal or is actually being shipped East, no way to tell.
Getting back to Russia, Mr. Putin has finally spoken out in aggressive fashion. Late last week he made several statements including, “There is risk of major conflict, the U.S. dollar is losing trust as a reserve currency and the U.S. cannot humiliate its partners forever.” Why has he chosen “now” to become boisterous? There can be several reasons individually but most probably all have come together at one time. First, surely none of what he said would be done without the knowledge and approval of China. Secondly, he has just finished many rounds of talks with Middle East nations where I am sure trade, finance, energy and “protection” were all discussed. You can also add to this, November 1st is now only a week away and with it comes the calendar beginning of cold weather. Russian gas supply to Europe is a trump card that no amount of “dollars” can beat, not even if you burn them all for warmth. You see, Mr. Putin has the ability right here and now to blackmail much of Europe into fracturing away from the U.S.
Did he speak during his talks to Arab oil producers regarding “his markets” and his expectations that the Arabs not fill any void he creates? Probably, I certainly would. Please keep in mind that Russia has been militarily “probing” NATO everywhere on the planet. They in my opinion are testing our response times and also showing us they are no longer a broken state. Russia also last week sent military equipment and personnel to the hotly disputed Arctic Circle. Does he plan to plant a Russian flag and thumb his nose at the U.S., Canada, Norway and Sweden? Again, probably.
As to the Mr. Putin’s “timing,” it is not just the cold weather coming. It just so happens the U.S. Fed is now about done with the current round of QE. Our markets are beginning to convulse and the calls for renewed QE can be heard even from within the Fed itself. This, at the same time Europe reported a banking stress test with 25 failures and 100’s of billion euros in new capital needed. Please remember, Mr. Putin is a brilliant guy and can do logic as well or better than anyone. He sees the West’s economies and financial systems weakening and knows the Achilles Heel to the system is physical gold. While we have tried to isolate Russia, they have firmed up allegiances with China, the rest of the BRICS and now even Middle East oil producers.
NONE of what Mr. Putin says or does is by mistake or coincidence, everything is planned and done so well ahead of time. Do you really believe earlier in the year he would have pushed Russia’s position when it would be stronger in 6 months’ time? Russia now has more alliances, trade deals signed, gold and Chinese backing than ever before, …while the West has accumulated more debt, printed more currency, cut military numbers and EXPORTED gold not to mention “weakened relationships” internally. This is not rocket science, the West has been declining for years and is now 6 months weaker while Russia/China et al are rising and are 6 months stronger and wealthier …
The fact that ‘the Bear’ is now growling publicly should not be overlooked as Mr. Putin would not do so, so loudly unless he was already in position.
Thanks for another great article Bill-
I’m going to stick to my hypothesis that there is a battle under the covers for the next monetary system… Putin growling is the magician distraction so the real trick isn’t observed. BRICS either has, or is very close to having the capability to maintain the member countries without the West or IMF. If the US Govt wants any hope of maintaining some power through the IMF, collapse will likely be coordinated sooner rather than later to deter or interrupt the BRICS plan. Timing is everything here, and I will not be surprised if things happen successively and rapidly over the next year or two to try to assure an ‘IMF as savior’ outcome.
not sure the IMF will be acceptable to the rest of the world.
If Putin was all that smart, why isn’t he doubling down on buying up all the Silver? This will blow up the system a lot quicker than buying Gold! Silver is also a much more strategic and monetary important metal than Gold. Putin has to know this. Unless of course, they’re also trying to maintain the same corrupt system… Yes, chess is a great game and Putin knows it well. Just my thoughts.
silver is NOT a more important monetary metal than gold. Do we know who all the longs are in Dec. silver?
You bring up a really good point. From a strategic standpoint if blowing up the system were the only consideration they would be hoarding silver as well. This is not the case (that we know) and a good indication gold will not only act as a hedge to dollar inflation but a key player in the new monetary “system”.
Maybe a basket of currencies and gold as the eventual reserve currency. I hope it happens later rather than sooner. Having to balance the books in America would not be fun to live through.
there is not enough “dollar value” to be had in silver as only a small amount of capital (less then $10 billion) would turn the market upside down.
Bill, do you happen to read John Mauldin? His latest article talks about the flow of capital out of the emerging markets and into the safe haven of the dollar again. He expects a several year continued increase in the strength of the dollar. I do wonder if indeed the capital flow reversal due to malinvestment/bubbles in emerging markets leads to once again a significantly stronger dollar, which would then possibly lead to major crises in emerging markets and possibly the US through tighter linkage of markets than ever before.
Here it is. Actually he excerpts Worth Wray, who quotes Kyle Bass:
with much trade in the future being settled “non dollar” I believe he is wrong.
This is a very good and well written summary of important geopolitics.
Good work Bill.
Bill, great work, as always. IMHO all the sanctions, verbal fear mongering, bullying etc between the U$$A and Russia are scripted at the highest level. The Central bankers of the world meet every few weeks in Basel at the BIS for tea… They know exactly who buys, who sells, where interest rates will go, if PM inventories are critical yet or not, you name it. It’s all a scripted $hyte $how, they know it. They know the rough contents of such public speeches ahead of time. They know when the plug on the dollar will be pulled, because they decide when it’s pulled pull. It’ll be done when “they” are all ready – to what end, we will see after the fact only. I’m all in fiss (agnau) and whatever remains of the clobbered miners), some lead, food+water, firewood, some cash, and a happy family. Thanks for all you do, good bless, and good luck to ya’ll out there. x
I agree as well with this assessment. I have a hard time believing the rhetoric between Russia, China and the West is not scripted. The way free trade, QE, the repeal of Glass-Steagall, the whole mortgage backed securities fiasco, the way we were sold on QE as do it or the end of the world, open boarders yet we are supposed to fear terrorism and so much more (ebola)proves the weakening of America has been a planned process.
I agree, no one could be so stupid…but planned by who? I do not believe Russia and China are in bed with the BIS, just my opinion.
While I appreciate your articles and check for them daily, nevertheless I see a blind spot.
Like most doing analysis, you’ve a position and transfer events into supporting it.
I feel the argument toward Russia/China being actors in a play organized by the powers behind the BIS/Central Banks warrants more inspection.
As the commenter above me notes, Russia/China (and in fact, all the BRICs) send their Central Bank heads to a bi monthly meeting at the BIS. These peoples very position as central banks head is almost assuredly due to their being part of “the club”.
I’ll believe Russia/China are bucking the current system when they sever ties to the BIS/IMF/World Bank. Not just talk but action.
Need I note, many gold analysts were claiming that the establishment of the Shanghai Gold Market was bound to result in a repricing of Gold. Yet, so far … nothing.
The western financial overlords obviously are aware the west is being drained of Gold and yet they allow it.
I’ve yet to read a plausible explanation as to why they allow it. And please don’t claim it’s because they’re clueless or can’t prevent it. No way the people at the very top are clueless or not in control. No-one in Russia/China banking is attempting to replace the fraction reserve/charging interest for loaned money paradigm.
The west explicitly gave China Most-Favored-Trade status. Job/industry outsourcing was given high level political backing for decades.
As FDR stated, ‘In politics, nothing happens by accident’.
Most likely that’s doubly true for the top echelon of financial/banking circles … i.e. the owners of the BIS.
After all, they’re the ones controlling the politician puppets strings.
…the BRICS bank, currency swaps, trade deals excluding dollars, and yuan currency hubs all over the world argue against “my blindspot”.
I think it is possible that the reason for the suppression of the gold price is to allow Russia, China, and others to play “catch up” with their gold reserves. Once they have enough to make the playing field more level, then we will see the big monetary reset. This way perhaps WWIII can be avoided. Because if the reset happened before superpowers such as China and Russia got up to speed on physical reserves, I think there would be war for sure.
The only person I have heard talk about this is Jim Rickards, he mentioned in passing that this could be one scenario.
China is more than up to speed.
One of your better articles, Bill. I’m proud to be from the West, and thankful to have gold & silver. That’s where I am. I’m from THE WEST, with GOLD & SILVER. I guess the East are smart guys for cornering the flow of gold. I guess the PLANNERS should get out of business. I think I understand the type of situation they’re in, but their quotes are dumb, not friendly to gold, and not friendly to retirees. So – true or not – I perceive that as being complicit. Shame on all of them. They should be more loyal to their Western friends. Who’s who, right? I also agree we’re not so far away from “the reality-check”. Not only in the US, but also in the EU. I believe it will go as far as being forced to re-examine the monetary & economic situation by asking: “What have we left here? What type of business produces the money here?” This entire system looks very much broken. The people will never take it. Here, where I live, already 4 national strikes are scheduled and “things” didn’t even break yet. Note the new email, thanks.
I heard that Putin kicked the Rothchilds out of Russia 2 years ago. Gutsy move to say the least. Didn’t the Tsar turn his back on the Rothchilds in 1918? Two years later there was a Rothchild sponsored revolution and the Tsar and his family were all murdered. Just saying.
…and in China?
Here is a quote from Putin’s speech at the Valdai Discussion Club in Sochi last week:
“After all, the United States’prosperity rests in large part on the trust of investors and foreign holders of dollars and US securities. This trust is clearly being undermined and signs of disappointment in the fruits of globalisation are visible now in many countries.”
The english version of his speech is well worth reading and can be found here:
almost everything he said in this speech hits the target.