“We need to secure our gold and currency reserves,” these words were recently spoken by Vladimir Putin. What do they mean? Why would he say this? Isn’t it obvious that you would want to protect your gold? What would prompt him to even mention gold or currency reserves … and why now?
To answer some of these questions, first let me take you back about 10 years or so, do you remember the picture of Mr. Putin holding a very large, bright and shiny gold bar? If you sit and ponder this just a bit, I’ll bet you can figure out what that photo op was all about. You see, Mr. Putin amongst many other talents is a great mind and a strategic chess player. He knew. He knew back then that the dollar did not have a long term future and that the pin on the grenade had already been pulled. That photo op was taken not because he wanted “press” coverage or because he wanted to be seen with wealth in my opinion, no, he was sending a message which is exactly what I believe he is doing again.
If you recall, Austria is now requesting that they be allowed to audit their gold holdings in London. Germany did the same with the FRBNY over a year ago with less “luck.” Mr. Putin has seen this and he can also do math (as can the Chinese). He knows that more gold has “moved” in recent years than could possibly be; unless some of it came from Western vaults. Putting 2+2 together, Mr. Putin, the Chinese and apparently the Germans and Austrians are wondering where all of this gold has come from. OK, so I’m being nice, they know “approximately” where it came from; in the case of the Germans and Austrians they are hoping that none of it has come from their stacks.
Yes, Mr. Putin is stating the obvious here because he does not want Russia’s “currency reserves” to be held hostage in the sanctions game. This would explain the large $100 billion drawdown of FRBNY held treasuries back in March. Russia moved the treasuries out and is in the process of liquidating them while purchasing gold with a small part of the proceeds (900,000 ounces last month) so far.
As for the “gold part” of his statement, I think he is just drawing some attention to the current sentiment that is beginning to question who has what and where. I think he is also drawing attention by putting the two (gold and currency reserves) together in the same sentence. I would not be shocked if we soon see a joint Russian Chinese statement that “gold” will be a part of their energy deal. Do you think Mr. Putin wants to ship oil and gas to China for pieces of pretty inked paper that have no real value? Hasn’t he already seen the Saudis do this for some 40 years now while depleting there in ground reserves?
I have thought for some time now that China would do some sort of gold backing to the Yuan. After thinking this through further, I truly believe that “backing the Yuan” was a part and parcel of the deal between Russia and China but has not been announced yet. This surely must have been discussed and probably quite some time ago. This makes sense to me as Russia will now have a steady and guaranteed outlet for their product and the income from it. China on the other hand will receive energy to fuel their economy and a source of “demand” for their “petro Yuan.” Do you see where this goes? This is VERY similar to the petrodollar deal that we did with Saudi Arabia 40 years ago with one little difference…gold!
Think about the forethought here. Russia has been buying gold and China has been gobbling gold up as fast as it could be humanly refined and shipped. They have not yet made any announcement on how much their reserves have grown to but I would imagine that an announcement will come shortly. If I had to guess, we will hear a grand announcement that solidifies the Yuan as being backed by a ratio to gold and they will also announce a “price” that gold will be pegged at.
Scoff at this if you will, the U.S. “revalued” gold upwards by 75% to $35 in 1933 and then 11 years later along came Bretton Woods. I believe that the Chinese will follow this model but all in one step. There are many ramifications to this if it in fact does happen. I would add that I also believe the Saudis will announce that “some” of their production is going to be contracted to China, another “support” to the petro Yuan. You must also ask yourself why Exxon and BP have just inked new energy contracts with Russia in the face of and contrary to U.S. sanctions. Could it be that they also understand that the current “something for nothing” dollars for oil is not fair or equitable?
Getting back to ramifications, what will happen? My guess is that the dollar will come under some serious weakness and panic selling. We will see the derivatives monster fail and seize up with banks and brokers going upside down …or… we just have a holiday. If the Chinese unilaterally raise the price of gold (my guess would be $10,000 per ounce or higher at today’s dollar) there will be some serious problems. How would the COMEX react to this? Would they immediately claim “force majeur” and settle on the previous day’s price? Probably yes in my opinion. This would also mean that gold’s pricing mechanism has moved overseas and away from the U.S.
Some may say that this thought process is far-fetched. I don’t really think that it is. I think that this was planned out several years back and that the Chinese have been working on “cornering” the physical gold market. They allowed (or even aided) the suppression of the price of gold which aided them in making their purchases. Let me explain this a little bit because it needs it.
Do the Chinese care about “the price” of gold? I can almost assure you that they do not. Would it have made any difference if they were paying $3,000 per ounce on average instead of $1,300? No, not one bit because they are “spending” dollars and I believe they know exactly what dollars are worth. I don’t think they care one wit. But…if the price is dropping then there is no danger of a stampede for delivery. Yes there has been additional demand to purchase as a function of lower prices but there has not been any “panic” buying. I think that they fully understand “where” we are exactly and that a global financial panic can begin at any time. If this were to have occurred 2 or 3 years ago, that would have been 2,000 to 4,000 tons ago. They needed to string this thing along as far as they could until one of two things happened. Either the financial panic and thus a “run on the gold vaults” or there is no more to be delivered. Either way they accumulated as much as possible prior to re pricing the metal.
Don’t believe this if you care not to, the Chinese are very smart people and fully understand what “money” really is. They have the ability, the money, and the motive, the “everything” to pull this off. They have every reason to move along these lines, read between Mr. Putin’s lines as he is giving you some hints along the way… and he is now speaking “for” the Chinese which is a big change and one he would not make without Chinese approval.
Lately, you’ve really been hitting them out of the park!! Nobody connects the dots quite like you do.
Thanks for another great article!
thank you Al, everything truly is connected in one way or another.
Makes great sense, Bill.
I have been in the ‘dollar will fail eventually and the world will return to a de facto gold standard’ since 2004.
Given the deep criminality of the folks involved in suppressing gold and silver — which I only learned about in the past five years — it is no wonder that it is taking a long time (forever, it seems!) for the The Cabal to fall.
May it happen soon, though!
As John Embry now says, “the only question now is when?”
You are a very wise man Mr Holter. Many get much out of your observations and writings. Likely more than you know. I know why you do this and it is not for money. In my humble opinion. God bless you and your family sir.
Thank you for all you do every day for others.
Thank you so much Gary. Some know, others don’t that both Andy and I wrote for 5 years or so without compensation or sponsorship prior to Miles Franklin seeing merit in our work. We both wanted to be on the record, prompt people to protect themselves and to hold hands of those who got weak in the knees along the way. This has been quite the personal journey for me as I went all in back 1997-98 and lived through every “pothole” along the way including this one. I think they need to do some roadwork!
Another home run as usual.
Who has the gold makes the rules (and price) !!!
Welcome to Chinese rules and prices !!!!
thanks Farrell, yes, the Chinese will soon make the price whatever they choose.
Another article making perfect sense. I am almost numb with how long the facade has been kept going though, and don’t doubt if it can be kept going far longer than most believe. It’s already done so for John G. above. IMO the best thing we can do is prepare for the worst (guns, friendship networks, cash, food/water/preps, PMs), hope for the best, enjoy life but keep your eye on what is going on in case you need to act/respond quickly as events unfold.
when it does unfold it will be lightning quick.
Bill…Consider this. Perhaps the Chinese already have enough gold and their continued buying is more for the purpose of draining the West of her gold than for acquiring more gold. “Be strong where your opponent is weak” paraphrasing Sun-Tzu, the Art Of War.
yes, that goes without saying… keep buying until the well goes dry.
WOW another great article Bill possibly one of your best. Clear concise and eminently probable. My humble thank you for all the information you publish.
thanks Bopil, it’s a funny thing, some pieces that I write I think are profound and others I don’t. I never know what is going to strike a chord or hit home until after I see the responses. I appreciate ALL of the responses good or bad and I try to respond to most all of them, please pass my (our) work on to friends and family who think that you are nuts because then they will have to argue with logic. We are now in the “math” or logic zone where too much no longer makes sense, it will be “their” undoing. Thanks again.
Sorry… edited for typo’s…
I think what you state here is is a very strong possibility and I am impressed with the way you put it all together. Now to go a little farther down the road, we would be facing some certain un-knowns. So hoping for the best out-comes of how this might play out, I would like to interject some things.
So the Saudi’s start trading in non-US dollars, and that pretty much ends the game and there is a run on the dollar and we lose our status as the world reserve currency. Some would say at that point that desparate times would call for desperate measures and that a war would/should ensue to protect our interests/status. Such a war, I fear would be different than others as it would be waged in utter desperation and with immoral leaders and therefore may not stop until total annialation (of either us or the whole planet). So, obvioucely I hope not.
Instead, I would hope that just as the bubbles need to pop and things need to be re-set and sanity in the monetary systems restored, as we should have done in 2008, Americans as a whole with many good people can percervere through what would likely be a lost decade of great pain. My hope would be, that tyranny and martial law would not ensue but instead we would start to build again based on core beliefs and aspirations. That Americans would never lose sight of the freedoms we were founded upon and that we will strive to re-establish our work ethics, manufacturing base, and remember the greatness of the American ideal based on freedom and liberty.
It would be after 10+ years of suffering that we could arise again as a beacon of freedom for the world but this time not try to spread it through a military/industrial complex, but just to be the ideal again, the country people aspire to be like, as an example of a free land where there is little government hinderance placed upon its citizens and the opportunity is there where anyone can achieve their greatest dreams if they work to acheive it. This is what I hope to see transpire after what is appearing will be a FORCED re-set. We are still a resource rich country, this could help us become great again.
all that you state would be wonderful after the pain…I believe a zero or very close to zero % probability of working out this way. The “Americans” that you speak of are mostly all very old or already dead, we no longer have the collective moral backbone that is needed in my opinion.
Thanks so much for the personal response and thank you more for what you are doing. The insight you offer will be far reaching to many I am sure.
I am a father of 5 daughters…. highly concerned but I HAVE to remain an eternal optimist being who I have in my life to protect and cherish.
So, my optimistic answer back would be….
I agree with you that much of these moral values have been lost to the masses. I fear many will remain lost. but as shown in the past, God will deliver those who seek it and even soften the hard hearts if they strive at least learn how to do good. i believe instinctively that there will be enough good people who will strive for this and so my wishful thinking is that out of all the coming pain, we do have hope to become a great and honorable country again. That people will chose not to kill or give up and die, but will become humbled and choose to rise up and perservere and we can once again be a more pure and moral people who stand for liberty and justice.
Let me make one comment to dumb this up a bit. Many people, while they are lost and living the lie, will go see their super hero movie and still, in a silly and small way, aspire to be like Superman and all the truth, justice, and the American idea/way. So my point being, it is still there and it may just take pain for them to dive deep enough to find what they truly believe and stand for. haha silly right? But since they are sheeple, we have to take it down to that level and will find there still is hope.
So, this is my hope and I will hold onto it. I am preparing for the worse case scenario as well though. I know most of our hero’s, the greatest generation is older now, but there are still many of us who were raised by parents and grandparents of those generations and will cling onto the foundations that we were taught.
This combined with that man can be humbled by the pain he has caused himself and some will choose not to perish but will call upon God once again. That God is merciful and we are his children and he wants us to progress and have joy.
So I have hope still my friend, despite my not being blind to what we will have to face. I am glad there are people like you and the good folks here who will likely survive the coming calamities. Then we can re-buildand be surprized that there are some we didn’t expect to see who are ready and willing to help. So I can hope.
thank you Rich. I think it is “because” you have 5 daughters that you MUST always have hope…for their sake. What you write would be nice but a very low probability in my opinion, especially if the financial system completely implodes and the frauds revealed. People will react in anger because they will understand that the situation was no “accident”. Unfortunately, this also augers for an “every man for himself” mindset rather than pulling together. Please remember that we have built a society where 1/2 rely on the state for sustenance, they are a large group and do not have the mindset that you write about.