The big story regarding the Asian Infrastructure Investment Bank was the application by the Israelis. This came just prior to the deadline and of course at the displeasure once again to Washington. Britain was the early defector followed by Germany, France and Italy. Eyebrows were raised when Saudi Arabia made their announcement but I believe what was truly missed was the application by Taiwan.
If you are old enough to remember, Taiwan was “recognized China” in the eyes of the U.S.. Mainland China was “Red” China and not officially recognized by the U.S., the application by Taiwan slipped by with little to no comment. I believe Taiwan’s application holds great significance because it means the “elder families” are on board and have given their approval. This is truly big news yet not even spoken of in the West? As I understand it, the application must now be approved, a potential sticking point is the name “Taiwan”, this will be very interesting to watch!
Why is the AIIB such a big deal? There are several reasons but I believe the biggest is because it is a very public piece to the bigger picture. Not only has the bank attracted the Asian countries one would expect, it has attracted many Western countries and even those closest to the U.S.. Going one step further, ALL of these applications came against U.S. lobbying and were followed by public rebukes from Washington. This was the first instance where the world collectively (including long time U.S. allies) has expressly denied Washington’s wishes.
The AIIB is only one piece to the puzzle. Another is the clearing system set to directly compete with SWIFT. Yet another is the BRICS bank, and let’s not forget the Shanghai physical metals exchange set to go live shortly. Can you see the picture these pieces are putting together? China, Russia and the rest of the world could see what is coming but they have not been ready for it…yet. Each one of these pieces amounts to preparation for what is to come. When I say “preparation”, much of it has been put into place to buffer the East (and rest of the world) from the financial collapse of the West.
The clearing system for instance will allow and aid trade to continue between nations should the Western financial system close because of insolvencies or bankruptcies. Call it contingency planning and they know what the contingencies are. Another way to look at these plans is to see the U.S. becoming isolated. The U.S. has been trying to isolate Russia and cut them off from liquidity and trade, China (and Russia) have been isolating the U.S. little by little with each new deal signed but have not pulled any triggers along the way.
Until now and until these preparations were made, the East could not afford for the West to fall because they would have been taken down with it. Now, the East has alternatives. There are clearing alternatives, financial ones, new trade deals and routes, and of course even currency alternatives being made ready. The U.S. has relied on the dollar being THE only alternative for the world to clear trade, this monopoly is ending. What I am trying to explain is this, there are now very few preparations left unattended.
When the U.S. originally began pushing economic and financial sanctions on Russia, I immediately was confused. I was confused because in my mind, Russia had the ability to destroy the U.S.. They had all sorts of options, they could sell their Treasury securities and dollars and simply blow up either the gold or silver markets. They could have defaulted on their debts or gone hot in Syria, there were many possibilities but none ever pursued. Don’t get me wrong, Russia would have suffered greatly, but, the U.S. has been wobbly enough for a direct effort to have tipped the scales. Again, because they were not ready, no trigger was ever pulled and I believe we have been “carried” like an aging prize fighter, “they” being the Russians and the Chinese.
One last preparation has been longer term, the accumulation of gold. You must ask yourself “why” Russia and China have been accumulating so much gold? The answer is twofold, they understand gold to be money but more importantly they know “where” their purchases were coming from. This preparation involved not only amassing “money” but also bleeding the West of their money (gold).
It is truly scary to see all of the pieces that have been put into place because they are all locked and loaded. Nearly all of the future plans and programs are now in place. The only one we are awaiting is for the Shanghai precious metals exchange to go live which should be very soon. This exchange can either be a trigger or a barometer. Should China decide to revalue and reset the system, they can easily do this by marking gold up using their physical exchange. You can deny this if you will but it is the reality. COMEX and LBMA do not have the inventories to compete with or supply Eastern demand, China will eventually set price whether you want to believe it or not.
This needs a little explanation and can be defined in one word, “arbitrage”. Should China decide on a markup phase (they will) for gold, all they need to do is bid their own physical price higher. Should COMEX or LBMA lag behind this move, traders will then have the incentive to purchase Western “paper” and simply demand physical delivery. The delivered gold (while it lasts) will then be sold at the higher price in China and thus a profit for the trader. This is Mother Nature at her finest and China could not be accused of “busting” the Western exchanges purposely because the arbitragers would be doing the dirty work. To put the game in perspective, COMEX registered gold inventory amounts to about 2 days worth of Chinese imports, these shelves are nearly bare in the grand scheme!
They do not even have to act in a direct fashion other than to announce how much gold they have accumulated. China undoubtedly has already accumulated more than 10,000 tons and probably more like the 20-25,000 tons Alisdair McLeod believes. Were China to announce they hold 10,000 tons of gold, what do you believe the market’s reaction will be? The price of gold will explode on any announcement such as this because the math and common sense behind it. The world (West) will be slapped in the face that China “believes” in gold. The speculation of a gold backed yuan will run rampant AND the natural question of “where did all this gold come from?” will be asked. As I have mentioned several times before, another tactic could be China simply “bidding” for any and all gold at a specified price using their dollar hoard to effectively “set” the new price. This avenue will only be traveled once it becomes apparent that Western vaults have been emptied.
My point is this, the number of potential triggers is staggering and they don’t even necessarily need to be pulled …but they can now be pulled with less recoil than there would have been previously. The fiat Ponzi scheme will fail on its own and without any help, however, “triggers” can now be pulled because there are alternatives and contingency plans to continue trade, operations, finance and business in general to the exclusion of dollars and specifically the U.S.. Think of it as a giant wall being erected around the United States and the West to contain or limit the damage that spills forth. The final bricks to this wall are being put in place!
“but they can now be pulled with less recoil than there would have been previously.”
You undoubtedly understand this, but the biggest recoil of all will be a nuclear retaliation. Surely the East knows this, which is why I’m surprised they are allowing the western vaults to completely drain which will result in complete financial destruction of the West, which will not bode well for Asia. Perplexing.
unfortunately yes.
Hi Bill,
This article was a pure delight to read. The pieces of the “puzzle” are getting together: 1) AIIB (for the IMF); 2) BRIC (for the world Bank); Gold accumulation to back or partially back the currency plus the physical exchange (good luck COMEX with “paper” gold!) that would create arbitrage opportunities (HFT maybe?). Cannot get clearer than that!
Kind regards,
Daniel
thanks Daniel.
I find it interesting that while all these things you have laid out are coming together, we just happen to have a political leader whose life goal and training has been to bring America to its knees for its past and present “evils”.
I’d say that’s another “brick”. Hmmm- I wonder how that one got in there….
not sure but I do know there are no coincidences, …(on purpose)
Whole heartedly agree Bill. Putin and the Russian people have shown great restraint when confronted with the incessant war mongering from the west.
In a recent interview, Putin was asked; “Am I a ‘pure democrat'”? His answer (below) is surprising and shows a little bit of what makes this man tic.
“Of course I’am. Absolutely. The problem is that I’am all alone, the only one of my kind in the whole world. Just look at what’s happening in America, it’s terrible – torture, homeless people, Guantanamo, people detained without trial or investigation. And look at Europe – harsh treatment of demonstrators, rubber bullets and tear gas used in one capital after another, demonstrators killed on the streets… I have no one to talk to since Gandhi died.”
The Russian restraint and legendary ‘patience’ is beginning to pay dividends for them, as they hand the west all the “hanging” rope they want!
hard to believe as I was a child born in the 1960’s.
Bill, do you know which Latin American countries (exception of Brazil) applied to AIIB? How is it that debt default in these nations (Argentina) aren’t triggers?
no I don’t but it is not that many.
Hello Bill
This is nice theory, but but why do you think they(China)will do that this year?? They can announce/reprice it in 2017,2018 or even 2020 or later..
because everything is now in place and the gold is most probably running low.
….AND Bill
the margins in cb, and derivitives
This is a devastating situation for the USD. I believe the Chinese will wait for one of two things: 1) the USD crashes due to our overblown debt and the Chinese simply issue the coup de gras, or 2) the Chinese wait until all the gold coffers are empty, then launch a preemptive monetary strike using, as you mentioned, a gold bid high enough to make arbitrage profitable.
Sad to say our own arrogance has gotten us here. The straw that breaks the camel’s back will be placed by a single individual who doesn’t believe in American exceptionalism, but treats the rest of the world as if it exists-even in the absence of current fiscal examples.
The outcome of all this will be remembered for generations…hopefully
hopefully.
Bill with all these countries signing on with the AIIB, especially all the historically close allies of the U.S. – They must know all the details of; 1.) What is coming 2.) How it’s coming 3.) What will happen to the $ 4.) Likely “When” it’s coming.
None of this is reported to my knowledge in the MSM or on the MSNBC or CNBC networks. And all we really have to go on are a few crumbs regarding the “nuts & bolts” of how this will go down. I mean, We have the greatest “Change” historically as to how world commerce is to be conducted – And basically a total blackout of news and information. This, of course, is especially disconcerting for the nation who has been the world’s super power economically, militarily and financially for the last 70 years – Yet her people are kept totally in the dark. This will not bode well for Americans at all – Otherwise we would know a lot more about it. Take care Bill.
Almost NONE of this is in the mainstream…but it is real.
Bill, I am at j c Davis’s house.
I posted in g hunters interview to REGGIE MIDLETON, the very same thing w/less words.
NDBANK
AIIB
UNIONPAY
SGE
CIPS
SILKROADS
you HAVE NAILED IT!!!!!
thanks Allen, saw your post on Greg’s site, appreciate it!
Bill,
Let me see if I understand this correctly.
The USA got rid of all it’s manufacturing and then started importing stuff from China and paying China in Federal Reserve Notes.
Then China took the Federal Reserve Notes and bought all the gold that the USA had (and probably some gold that the USA was holding for other countries like Germany).
Surely not, would would be that STUPID?
all true.
The fact that certain politicians and bankers have sold, leased, hypothecated or otherwise stolen all of the US gold will not, unfortunately, resonate with a majority of Americans, especially those that have never lived under the sort-of gold standard established at Bretton Woods, and/or are clueless about the ramifications of Nixon’s actions in 1971. What will resonate, like a 2 X 4 over the head, however, will be the immediate devaluation of the USD, and the concomitant loss of purchasing power and standard of living. Some have opined that the entitlement society would cease at this point, but I disagree. The Government will not be able to handle the civil unrest without massive and purposeful genocide. I doubt that even the most extreme psychos among the policy makers have the cajones; although you never know.
I think we will find out.
And the trigger by China of BIDDING for gold at a price that is high enough, will also result in everyone in the world to re-price their gold to China’s Bid Price (in whatever fiat currency).
In one fell swoop, China will not only beggar the western powers; it also enriches themselves. Since they will only do this once, they can make sure the Freegold value will bring a lot of true wealth to them for the next 100 years.
What if? China bids for gold at $1 million per gram? And they announce they have 10,000 tons (or more)? They just gave themselves and Russia (and other gold holders) a big boost of the best collateral in the world! 10,000 tons would be 10 quadrillion dollars. They can pay off all debts and do massive projects all over the world with 1 quadrillion dollars.
The other question then arises – How much gold does the US have? The answer will be – how bad will our economy go?
this is the theory or something very close to it.
BILL have u seen this?
Discovery of New Element – a major research institution has recently announced the discovery of the heaviest element yet known to science. This new element has been tentatively named “Administratium”.
Administratium has 1 neutron, 12 assistant neutrons, 75 deputy neutrons and 111 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by a force called morons, which are surrounded by sycophanions and vast quantities of lepton-like particles called peons.
Since Administratium has no electons, it is inert. However, it can be detected, as it impedes every reaction with which it comes into contact. A small amount of Administratium may cause any reaction over 4 days to complete, when it would normally require less than a second.
Administratium has a normal half-life of 3 years; it does not decay, but instead undergoes a reorganization, in which a portion of the assistant neutrons and deputy neutrons and assistant deputy neutrons exchange places.
In fact, Administratium’s mass will actually increase over time, since the reorganization causes some morons to become neutron forming isodopes. This characteristic of moron-promotion leads some scientists to speculate that Administratium is formed whenever morons reach a certain concentration which is referred to as “significant quantity”. This hypothetical quantity is known as “Critical Morass” and you will know when you see it.
good’ern!
If the above re-pricing happens, the US is not totally destroyed yet. The US produces a little over 200 tons of gold per year. That means 200 Trillion dollars per year, to pay old debts and money to spend.
The only problem – What about the gold we held in trust for other countries?
is it even there?
“As I have mentioned several times before, another tactic could be China simply “bidding” for any and all gold at a specified price using their dollar hoard to effectively “set” the new price. This avenue will only be traveled once it becomes apparent that Western vaults have been emptied.”
Agreed. This will be their final “clean-up” move, IMO, and it is one that they can implement at any time. In fact, I am surprised that they have not started this already. Gold CLEARLY has more value in Asia than it does in the West. Anyone who doubts that should try to BUY some gold from China or India and see what their asking price is. Something tells me that it would be substantially more than the current paper price for both gold and silver. This price divergence will not be getting any smaller as we move forward but it has considerable potential for becoming MUCH larger.
China will one day set the price.
Another fabulous article Bill. Thank You.
I hate to beat a dead horse but from the comments I’ve read everyone is focused on gold. If we agree JPM is the largest holder of physical silver and we agree JPM is the proxy for the US gov’t then when China revalues gold the silver in the USA coffers gets a HUGE hit. Could it be everyone WINS? Seriously, this is a possibility.
I’m kind of tired of all this gloom and doom shit. Perhaps humanity takes a giant leap forward?
thanks ST, it’s not gloom and doom, it is the way I see it and the way I believe it is. And no, “everyone” will not win.
Bill,
I truly believe this is one of your best pieces and every time I say that you seam to top it again and again.
Many are going to wish they would have read and “responded” to pieces like this.
A true wall hanger that should be framed.
Thank you!
WOW, thank you so much!
Wonderful piece … Very well written , Thanks for the new info.
It sure makes sense.
thanks Norse.
Thanks for a great article from over in the UK.
thank you Cris.
Rand Paul announced he’s running for President. Somehow, I can’t get excited about any presidential election like I did for his dad (Ron Paul). Rand Paul says he’s for full audit of the Federal Reserve.
The problem we (the entire world, not just USA) have is so big, no single man in US Executive branch can fix it. And in fact, mind end up getting John F Kennedy’d if he trys to. (Besides this, I’m not comfortable with bunch of watered down wishy-washy talk by Rand Paul. Like, Putin bad, throw Edward Snowden in jail, continue sanctions war on Iran etc. etc.)
I’m in the “Get your dehydrated foods, water filters, shotguns & Vote For Nobody” camp!
unfortunately you are right.
Hi Bill
I agree with Brady.
I said to my mother yesterday, “Have you read Bill Holter yet?”
“No. I’m saving him for later.”
High Praise Indeed.
tell your Mom thank you for me!
good concise piece and rather precise analysis.
from an outsider,
so? are you trying to save yourself and your family?
or are you trying to save the country?
what now? considering this piece …
http://www.zerohedge.com/news/2015-04-07/most-whiney-thin-skinned-easily-offended-society-history-world
if only you know chinese and/or russian language
you can hear for yourself what their msm (controlled and other relatively free) said about the “situation”
financial and military and the lots… by their experts
if good luck helps and make it sweet for your sleep
good luck
still as some of your expert have said
it does not have to be, even now
and I have said on other site previously
god/gods have the habit of leaving a backdoor open
considering even if there should be such a thing/miracles as holocaust survivors
but then if it is as armstrong said its part of the wave
then predestination it is
nothing to do about it than to make the best according to yourself and your family
none of us choose our birth right? and method of death for that matter?
how we check in? and checkout?
just enjoy the stay and enjoy the scenery
while there be some sort of induced-pleasure-triggered-response? 🙂
after all if you agree
what is pain to the body is pleasure for the soul (as some said)
then crisis and death is merely soul-in-training (or something like that)
that is if you do not live for this world (artificial systems) and not off this world
and come to the true recognition
if you are a soul in a body
or a body without a soul?
good luck/miracle to you and your family
thanks for the writings from the heart
yes Nd60, this is only a stepping stone world.
Thanks again Bill for another brilliant lesson in the world of economics. I need a bit of help in understanding something you state in the second to last paragraph. What will be China’s end game or reason for bidding up gold to reset its price? Is it to absorb their trillions of devalued US dollars with a fraction of their gold holdings and to establish the yuan as the new (preferred) reserve currency?
exactly Ron! they also know gold IS money.
From the beginning the fiat Ponzi scheme has been designed to bring down the USA not the Federal Reserve (it simply will be taken over by another company, one run superficially by Red China but actually Rothschild owned. Rothschild means red shield like Red China). This purposeful destruction is disclosed in the secret memo here: THE SECRET MEMO AT THE HEART OF THE GLOBAL FINANCIAL CRISIS PROVES THE CRISIS WAS PURPOSELY PERPETUATED BY THE ROTHCHILD FEDERAL RESERVE BANKERS TO STEAL THE WORLD’S MONEY.
The USA is made to look like it is isolating Russia but in fact both sides are working together at the top to isolate the USA. Look at the facts, which country is more isolated? This USA-Russia tag team is depopulating Ukraine. Many Russians have complained about depopulation of ethnic Russians, but not Khazarians. At the same time they’ve depopulated the middle east and Russia has done nothing to stop it. Why did Putin call the Palestine slaughter a war between Israel and Palestine? Only the Khazars would use such terminology. Why has Putin met regularly since 2000 with Kissinger? Do you think Putin became a $40B-$70B billionaire on his KGB salary? Why is the Khazar oligarch Roman Abramovitch his closest confidant, and why is he (RA) best friends with Nat Rothschild? Because they all are on the same page.
Bill – Once the Shanghai precious metals exchange goes live, what event(s) do you think China might use to finally pull the trigger?
I believe the price will diverge from COMEX/LBMA and arbitrage will empty the vaults.
Do you think China will start the divergence with a bid or will they simple let current events continue until the western vaults are proven to be empty (or very low on stockpile)?
natural supply and demand will do this trick where naked contracts do not exist to suppress price.
Hi Bill,
Agree 100%. It makes perfect sense. It might well look like a carrot (strapped to its back) dangling in front of a donkey’s face. And if the LBMA/COMEX raise their paper price to attempt to prevent arbitrage, the chinese will just up the price. Hmmm… wonder who sets the price now?! It did not have to be like this. Many decades ago, america was truly the light of the world, but sadly the corruption set in long ago, and the light of moral decency is now obscured under a bushel of corruption and decay. You have heard of physiognomy? Basically assessing a person;s character from their physical characteristics, esp. the face. Whether it is true or not, a lot of US leaders look stupid / corrupt. Maybe it just a coincidence? Thanks for your great work!!
a higher gold price in dollars is a no vote against dollars.
Hasn’t the Shanghai Gold Exchange already gone live?
not the cash and carry market.
When do you think the shanghai metal exchange will go live?
could be this month.
So with the surge in the last 10 years of specific “We accept Gold, Silver, Metals, etc” shops nation wide, (not just pawn shops) it would be interesting to see if there is a larger company collecting the sum of precious metals, initially collected from the smaller stores.
A way of ‘innocently’ stripping the general public of what they could’ve melted down or salvaged themselves and used for trade after the collapse. Just a thought.
the public has sold their family jewels.
That’s a fact! I have been in the gold/diamond/coin business for 30 years.
The jewelry boxes are empty.. People have run out of things to sell.
The gold and silver has been sent to refiners
To get a check back (cash flow) and I suspect the refined metals are made into bars
And are shipped to the east, where they are gladly received for stacking. It will be generations
If even then before the bars see the light of day again.
“forever”.
Dear Bill,
Thanks for your insightful article!
Given what you have said about the possible repricing of gold by the Chinese, what do you think would happen to the silver price? Would it have a comparable rise?
All the best,
Jimbo
silver is gold on steroids.
Thank you Bill – much appreciated article that puts much of the bits and pieces us Goldbugs try to understand.
My question is: What is China’s greater plan? Surely they have one.
to run the show …more fairly and in harmony with her neighbors.