Several things happened this past week that were easily connectable and in my opinion can be put together to understand what is happening in the big picture. I plan to interject some opinion (mine) in this piece, if you disagree then I would say that you are entitled (still), just as I am entitled to my opinion.
China announced that they plan to trade, price and create an exchange for both oil and gold …in Yuan. They also plan to set up a global payments system that settles in Yuan. A financial salvo was fired by the U.S. against Russia as their credit rating was downgraded to one notch above junk. Russia has responded by publicly making plans to abandon the dollar completely and also exiting the sovereign debt of NATO allies. We also heard that President Putin has “temporarily” shut off all communication with President Obama while John Kerry’s calls to his Russian counterpart have gone unanswered. This is really bad stuff to put it mildly.
One other strange event that occurred was that the USS Donald Cook has been seen exiting the Black Sea. Originally this ship was sent in as assurance to our allies and as a show of strength. Russia today reported that one of their jets “buzzed” the Donald Cook 12 times (and confirmed by the U.S.), they also claim that the “Aegis” defense system was shut down or jammed by the Russians and it was rendered defenseless. Some may say that since this news came from a Russian source that it is propaganda, I personally believe it. I say this because why else would the Thomas Cook exit the arena as tensions are as high now as at any point? In my opinion, Russia “tested” our Aegis system to see if they could jam it and they did. The Donald Cook has retreated because were an Aegis class warship to be hit or even sunk, “invincibility” would be disproven. Again, this is just my own opinion.
I titled this piece “The Nuclear Option” because I believe that we are very very close to being blown up financially. As I mentioned last week, James Turk has reported that gold bars from the 1960’s and prior are beginning to surface in the global markets. We also know that the U.S. exported a huge 80 tons of gold in January. I wrote a week or two back that in my opinion the elevated open interest in silver has Chinese origins but I cannot prove it. We also know that all of a sudden Belgium has become a huge buyer of U.S. Treasuries; this is surely some sort of Fed or EU central bank proxy to sop up selling without the Fed tipping their hand to outright monetization.
What I am saying is that the stage is set. I believe than an all-out attack on the dollar is about to commence…and gold/silver will be the “bullets” so to speak. I believe that the Chinese have seen a “change” in the “type” of gold that is being delivered to them and they know the math. When I say they know the “math” I mean that they know how much they have accumulated and subtracted this amount from what they believe that the West originally had…which is now being confirmed by pre 1960’s gold hitting the market. They know that we are on the ropes.
The above said any strategist worth their salt will wait until their opponent is weak or has been weakened and I believe our opponents have come to this conclusion. They know that we are low on gold, they know that there are no large stockpiles of silver, they know that we are printing dollars like crazy to stay afloat, they know that we are in debt in every way imaginable above our heads, they know that we are monetizing debt, they know that Europe will not side with us if their supply of natural gas is shut off and they now know (in my opinion) that they have cracked the Aegis defense system. They also know that our economic numbers are a total sham and that unemployment and inflation are grossly higher than we report. In short, they know that we are full of crap. “Pulling the trigger” at this point is not a huge effort and will certainly not take a lot of money. I estimated 2 years ago that the silver market could be completely cornered with as little as $5 billion (or less)…so maybe they’ll use $10 billion? Gold, (if we are out as I suspect) could be cornered in my opinion with a concentrated $20 billion order…so maybe they’ll use $100 billion? “Where” will this type of money come from you ask? The sale of U.S. Treasuries of course, killing two (or more) birds with one stone (our own) by cornering the metals and dumping Treasuries to pay for it.
I believe that the plan is to “isolate” the U.S., even without any “help” we are doing this all by ourselves. I can envision several events taking place all at the same time. Russia could push into the Ukraine, China could become aggressive with Japan, and North Korea takes their cue and attacks South Korea while Iran and Syria strike at Israel…all at once… while Saudi Arabia switches allegiance. Dollars and Treasuries are dumped with the proceeds use to “call” our paper metals markets and demanding deliveries. Interest rates may not rise as the Fed would surely become a buyer but the value of the dollar would certainly crater. Were all this to occur at once, how could we respond? Our military is too stretched and too weakened to cover 4 fronts at once. Any major defeat of our “technology” such as the sinking of an Aegis class ship would on its own sink the dollar by 25% or even more. I could envision all of this taking place, the smoke already beginning to clear and a very different looking world over a 2 week period. Please keep in mind that our markets, our system as a whole, are now more leveraged and more extended than any other time in history.
This opinion or thought process I have titled “The Nuclear Option” because our financial system would go so far up in smoke in such a short period of time there is no other name for it. This would leave us with only one option…”the nuclear option.” We would have only one retaliation available to us and that unfortunately would be the use of tactical nuclear weapons
I know that hearing this opinion is not pleasant. I am not writing this to be alarmist; I am writing it because this is how I see it. History has shown us that whenever one country “stiffs” another country financially …war usually is the result. In this case it is the U.S. that has “stiffed” the rest of the world by (over)issuing dollars that have been freely printed to pay for real goods which we have imported. We have “over” lived our means on the backs of the rest of the world for many (too many in their opinion) years and payback is what I believe the rest of the world desires.
All of this is just my opinion but I am willing to bet that it’s not too far off from what is actually heading straight for us.