Tag Archives: Gold

The Ruble, The Dollar, and The Price Of Gold – Who Is Really Winning The Economic Chess Game?

By Michael Snyder

Russia has just made some moves that are going to change the global financial system forever.  When the conflict in Ukraine originally erupted, the U.S. immediately attempted to crash the value of Russia’s currency.  Those attempts were successful for a few days, but now the value of the ruble relative to the U.S. dollar is almost all the way back to where it was before the start of the war.  This has absolutely stunned many of the experts, because they thought that U.S. sanctions would absolutely cripple Russia.  So what happened?  Well, it turns out that the Russians have made some very savvy moves that have turned the tables on the Biden administration.

For one thing, Russia has started to demand payment in rubles when it sells natural gas to non-friendly nations.  A lot of countries in western Europe are quite upset about this, but they really have no choice, because they are exceedingly dependent on Russian gas.  So from this point forward, Western powers are actually going to be forced to help prop up the value of the ruble

Russia wants “unfriendly countries” to pay for Russian natural gas in rubles. That’s a new directive from President Vladimir Putin as he attempts to leverage his country’s in-demand resources to counter a barrage of Western sanctions.

“I have decided to implement … a series of measures to switch payments — we’ll start with that — for our natural gas supplies to so-called unfriendly countries into Russian rubles,” Putin said in a televised government meeting, adding that trust in the dollar and euro had been “compromised” by the West’s seizure of Russian assets.

Secondly, the Russians have decided that U.S. dollars will no longer be accepted as payment for anything that they sell to other nations.  Pavel Zavalny, the head of the Russian parliament, says that U.S. currency “has lost all interest for us”

Much more interesting was Zavalny’s main point, even though it has been mostly overlooked. If other countries want to buy oil, gas, other resources or anything else from Russia, he said, “let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us, this is the national currency.”

In other words, Russia is happy to accept your national currency — yuan, lira, ringgits or whatever — or rubles, or “hard currency,” and for them that no longer means U.S. dollars, it means gold.

“The dollar ceases to be a means of payment for us, it has lost all interest for us,” Zavalny added, calling the greenback no better than “candy wrappers.”

This is huge, but it isn’t being discussed much by the corporate media in the United States.

The Russians aren’t just saying that they do not recognize U.S. dollars as the reserve currency of the world any longer.

That would be bad enough.

At this point, they are actually saying that they will no longer accept U.S. dollars as a form of payment at all.

Wow.

Thirdly, the central bank in Russia has fixed the value of the ruble to the price of gold for at least the next three months

The Russian central bank will restart buying gold from banks and will pay a fixed price of 5000 roubles ($52) per gramme between March 28 and June 30, the bank said on Friday.

But you won’t hear about this on CNN or MSNBC.

This is a move that could potentially change everything.

Once upon a time, the value of the U.S. dollar was tied to gold, and that helped the U.S. dollar become the dominant currency on the entire planet.

But then Nixon took us off the gold standard in the early 1970s, and things have gone haywire ever since.

Now Russia has linked the value of the ruble to the price of gold, and many believe that this is really going to shake things up

“I am reminded of what the U.S. did in the middle of the Great Depression. For the next 40 years, gold’s price was pegged to the U.S. dollar at $35. There is a precedent for this. It leads me to believe that Russia’s intention would be for the value of the ruble to be linked directly to the value of gold,” Gainesville Coins precious metals expert Everett Millman told Kitco News. “Setting a fixed price for rubles per gram of gold seems to be the intention. That’s pretty important when it comes to how Russia could seek funding and manage its central bank financing outside of the U.S. dollar system.”

Others believe that this move will create great instability in the global financial system.

For example, Tom Luongo is warning that the following could soon happen

  • 1: At $1550 per ounce the first order effect here is that is implies a RUB/USD rate of around 75. Incentivizing those holding RUB to continue and those needing them to bid up the price from current levels.
  • 2: This creates a positive incentive loop to bring the ruble back to pre-war levels.  Then after that market effects take over as ruble demand becomes structural, based on Russia’s trade balance.
  • 3: Once that happens and the RUB/USD falls below 75, then the USD price of gold rises, structurally draining the paper gold markets and collapsing the financial system based on leveraged/hypothecated gold.  Now we’re into the arb. phase @Lukegromen postulated w/ 1000bbls/oz.

Time will tell if Luongo is right or if he is wrong.

But without a doubt, things have not played out the way that Biden administration officials were hoping.

They had hoped that U.S. sanctions would crush the ruble, the Russian financial system and the entire Russian economy.

Instead, the Russians have been able to successfully prop up the value of the ruble and have made moves that directly threaten the dominance of the U.S. dollar.

No matter what happens with the ceasefire talks, I expect the United States and Russia to continue this economic conflict for the foreseeable future.

Ultimately, that will be bad for both of our nations.

And as history has shown, economic conflicts have a way of becoming shooting wars way too often.  Needless to say, we definitely do not want a shooting war with Russia.

Leaders on both sides should be attempting to find ways to achieve peace and to fix the tremendous damage that has already been done.

Unfortunately, everyone seems to want to continue to escalate matters, and that should deeply alarm all of us.

A Paradigm Shift in Global Finance, Gold, Silver, Uranium, and Grains Is Now Underway

By David Smith

The biggest financial paradigm shift in our lives is underway, and there’s no turning back. No one knows exactly what it’s going to look like going forward nor how we’ll be able to get there.

A working definition of “paradigm” taken from dictionary.com is that it is “a framework containing the basic assumptions, ways of thinking and methodology that are commonly accepted by members of “an operating system.” Think global to local and buy/ sell/exchange finance.

When a new paradigm starts being formed, an original set of rules has to be put together in order to operate successfully within it. Most of the rules that worked in the old paradigm(s) no longer apply. (An example would be trying to communicate with business associates and family by sending letters instead of email via the internet.)

During the new system’s “early days,” everyone using it is pretty much in the same boat as we all attempt to figure out what the rules are, how to best apply them, and what the results might be. Getting it right will hopefully enable us to be safer and more successful in our personal and professional lives.

The national and global financial systems were already under great stress due to mismanagement, indebtedness, the Covid response, and rising socio-political unrest.

To cite just two examples, the Canadian government’s response to the truckers’ drive to Ottawa, and the invasion of Ukraine by Russia and the West’s response to it have inflicted structural damage that could destroy the whole house of cards.

At minimum it is sweeping away operative assumptions most of us have followed in order to provide predictability, safety and financial growth.

This is not the place to argue the merits for or against one side or the other, but to state that the world is changing, and in many ways will never be the same.

Europe cannot survive without gas

Consider these data points:

  • The West’s freezing of Russian Central Bank’s $600B in assets is a first.
  • Exclusion of Russia from the SWIFT payment system of international trade.
  • Breakdown of the petrodollar system for oil purchases to allow yuan and gold.
  • Europe’s largest grain exporter, Hungary, ceasing all exports effective immediately.
  • Critical metals sources (REEs, copper, uranium, nickel, etc.) in limbo.
  • Cancellation of many billions, if not trillions of dollars in international contracts.
  • Canada freezing accounts of anyone contributing even $40 to an unapproved cause.
  • A gas supply cutoff from Nordstream 1 could bring German industry to a standstill.
  • The U.S. facing its highest inflation rates in 40 years.
  • The inevitable global drive toward “paperless” digital money and total privacy loss.
  • Gold and silver retail supply sources and premiums stressed as never before.
  • Most uranium and its processing coming from Kazakhstan and Russia respectively.

Anyone reading the above can list an additional dozen. The point being that the few remaining assumptions of our money being safe, accessible, and utilizable as we see fit have been shattered.

Neither the (hopefully) inevitable end of the war in Ukraine, nor effects of the Canadian truckers’ strike will restore the attributes most rational folks have held onto throughout what Germans refer to as Sturm und Drang (“storm and stress”) — trust in others, and confidence in the accessibility and value of our money.

Doug Casey, an investment and privacy doyen since the 1970s says,

“The only practical defense for the average guy is to accumulate gold and silver in personal possession… That’s because the only financial asset that’s not simultaneously somebody else’s liability is gold. Unfortunately, the average American neither understands gold (or silver) nor has any. Will that change in the future?”

Answer: See Mark Dice, in October 2021, offering passersby either a 100z silver bar (then worth around $2,000 but now closer to $3,000) or a candy bar.

The Message? The financial markets, including precious metals, are in sea change mode. Looking to the past is not going to enable you to thrive and survive facing tomorrow’s challenges. A glimpse of what to expect taken intraday from the Energies and Metals market action can be seen nearby:

Energies and metals market

Using 1979 as a guide to today’s more serious systemic risk profile suggests that we’ll soon see multiple dollar intraday silver swings; three-digit gold swings, and copper-now trading like a semi-precious metal, moving 20-40 cents/pound intraday.

Expect persistent two-way volatility in the entire commodities sector, along with ongoing inflation.

A few days ago, a two-day rise of 250% in the price of nickel shut down its trading on the LME. Wheat futures rose for several consecutive days at the expanded .85 cent/day limit. In a month, check your grocery store for the price and availability of grains.

Last week, crude oil futures touched $130/bbl. Care to bet against the possibility of $150 or even $200 this year?

Care to guess what this will do to today’s “officially-stated” 9.5% inflation rate (actually closer to 15-20%)? We’ve been seeing almost everything we use this year rise at least 15%, with +25% by no means an outlier.

Energies and metals market

The real danger going forward? An evolving built-in expectation by people that across-the-board inflation is here to stay…and it’s going to get worse. This will lead to a self-fulfilling prophecy as everyone “buys ahead” on anything they might need (think toilet paper buying on steroids), leading to hoarding for the sake of asset value protection and barter.

If folks are waiting for today’s “party carriage” — fiat — what David Morgan has long called “paper promises” to turn into a pumpkin of worth-less value, then be prepared to join the ranks of others in Lebanon, Turkey, Argentina, Mexico, Venezuela — and, yes, Russia, as you watch the nominal value of your greenbacks shrivel.

And if you’re not sure you “have enough”? Well, then don’t just stand there. Do something productive!

David H. Smith is Senior Analyst for TheMorganReport.com, a regular contributor to  MoneyMetals.com as well as the LODE digital Gold and Silver Project. He has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sector observations with readers, the media, and North American investment conference attendees.

New Year, New Hope for Gold and Silver Investors

By Clint Siegner

Silver and gold prices way underperformed investor expectations in 2021. Perhaps most frustrating of all, the fundamentals were there, driving unprecedented retail demand for physical bullion.

Inflation fears crept into markets. The Fed maintained ultra-accommodative monetary policy including zero interest rates and massive debt monetization. 2021 was also a nasty year for confidence in major institutions.

Nervous buyers switched paper assets into physical metal at a record pace.

Seasoned metals investors know great fundamentals don’t necessarily mean rising prices. Price discovery in the paper markets is broken. In the short run, it can be totally disconnected from the factors driving supply and demand for physical.

One of the big questions for 2022 is whether we will see better price performance.

In the longer run, fundamentals do matter. That is why gold and silver prices are multiples of what they were twenty years ago. This year the case for owning physical gold and silver promises to get even stronger in the months just ahead.

Price inflation will continue to rage. Higher wages, supply chain troubles, and labor shortages are not going to disappear any time soon. Deliberate government and central bank actions are responsible for the turmoil.

Americans can expect more economic interventions, restrictions, mandates, and artificial stimulus. Officials in Washington DC show little interest in changing their approach.

The moment of reckoning cannot be far off for the Fed. The central bank is caught between spiraling price inflation and markets hopelessly addicted to never ending stimulus.

Fed bankers are trying to maintain the illusion they can quickly step in and control the erosion in the Federal Reserve Note’s purchasing power without putting the US economy into the ditch. They are telegraphing rate hikes starting by midyear.

The central planners at the Fed can’t make a compelling case as to why markets will tolerate higher rates this time. They would like people to forget they have tried, and failed, before. The last attempt ended almost before it began when the stock market puked all over rate hikes in the fall of 2018.

A collapse in confidence in the Federal Reserve Note is not likely in 2022. But that event will draw nearer when Fed bankers once again demonstrate there is no way out of the stimulus trap.

Monetary and political turmoil will drive more Americans to acquire gold and silver.

Futures traders employed by large banks will continue to release massive quantities of paper gold and silver contracts into the market. They will also keep taking the short side of those contracts and pushing paper prices in their favor whenever they see the opportunity.

If global demand to take delivery of physical rises, the paper price of metal will eventually follow.

A breakout is coming. It may be a question of whether it happens in the futures market or after all trust in the futures market evaporates.

Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Gold, Silver and the Federal Reserve: a Transitioning Economy

Ryan DeLarme
July 27th,2020

While the world is currently filled with no shortage of crises that hold our daily attention, something even bigger than most folks can even imagine has been taking place in the background. The current Administration, in tandem with countless others, has taken the bull by the horns and nationalized the Federal Reserve banking system, essentially neutering the central bank cartel. They are building an entirely new economy, which will likely be backed by sound money. In fact, evidence heavily suggests that we are already deep in the transitional phase. You’d think the banksters and their corporatocracy would have activated all assets against Trump by now, right? Oh, wait a minute..

Understanding the Federal Reserve Cartel: Our Unelected Leaders

Who owns the private corporation that controls our economy? Well you got your Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome. Many of the bank’s stockholders reside in Europe.

The US government had a historical distrust of BIS, lobbying unsuccessfully for its demise at the 1944 post-WWII Bretton Woods Conference. Instead the Eight Families’ power was exacerbated, with the Bretton Woods creation of the IMF and the World Bank. This is also when we went off the Gold Standard for good.

The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. But their monopoly over the global economy does not end at the edge of the oil patch.

Companies under Rockefeller control include Exxon Mobil, Chevron Texaco, BP Amoco, Marathon Oil, Freeport McMoran, Quaker Oats, ASARCO, United, Delta, Northwest, ITT, International Harvester, Xerox, Boeing, Westinghouse, Hewlett-Packard, Honeywell, International Paper, Pfizer, Motorola, Monsanto, Union Carbide and General Foods, writes Dean Henderson at The Herland Report and Free21. In modern times this would also include most of the technocracy [Google, Facebook, Youtube, etc.]

According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.

So who then are the stockholders in these money center banks?

This information is guarded much more closely. Queries to bank regulatory agencies regarding stock ownership in the top 25 US bank holding companies are given Freedom of Information Act status, before being denied on “national security” grounds. This is rather ironic, since many of the bank’s stockholders reside in Europe.

Almost every country, including the United States, is snared in a Central Banking trap of fiat money and fractional reserve banking. Fiat currency is defined as “money that is intrinsically useless; is used only as a medium of exchange.” The value of money is set by the supply and demand for money and the supply and demand for other goods and services in the economy. The prices for those goods and services, including gold and silver, are allowed to fluctuate based on market forces. 

The seemingly endless stream of fiat currency from fractional reserve banking has also been a wonderful tool, whoever controls the magic money making wand essentially controls the Government. Here in the US that control lays in the hands of a privately owned corporation called the Federal Reserve, it’s board members and those they serve could be seen as “Unelected leaders”. These people control the flow of cash, and with it they control any politician who lacks a conscience, typically by funding them into office.

If we simply returned to a gold standard, we could POTENTIALLY remove the mechanism of power and control held by criminality in the highest places.

The Return of Gold and Silver

It has long been dismissed as a fool’s errand, on par with abandoning the Federal Reserve and other trappings of the modern economy. Mainstream economists deride it almost without exception. Reintroducing the gold standard would “be a disaster for any large advanced economy,” says the University of Chicago’s Anil Kashyap, who connects enthusiasm for it with “macroeconomic illiteracy.” His colleague, Nobel laureate Richard Thaler, struggles with its very underlying principle: “Why tie to gold? Why not 1982 Bordeaux?”

Yet the idea that every US dollar should be backed by a small amount of actual gold is more popular than economists’ opinions might suggest. Advocates include members of Congress and president Donald Trump. Enthusiasm for a return to the gold standard has become more prominent since Trump’s most recent nominees to fill the vacant Federal Reserve governorship have endorsed a return. The first two—Herman Cain and Stephen Moore—both dropped out of consideration, but the third, economist Judy Shelton, announced recently in a Trump tweet, may be the most ardent in her support.

Last year, Shelton called for a “new Bretton Woods conference,” akin to the 1944 meeting that established the post-war economic order, perhaps to be held at Mar-a-Lago, where a return to the gold standard could be considered. “We make America great again by making America’s money great again,” she wrote in the journal of the Cato Institute, a libertarian think tank.

Since 2011, at least six states have passed laws recognizing gold and silver as currency; another three are presently contemplating bills of their own. The surprising success of Ron Paul, a Texas Republican Congressman and ardent gold bug, in the 2008 and 2012 elections showed the potency of these ideas among the electorate. In its 2012 and 2016 campaign platforms, the Republican Party called for a commission to investigate the viability of a return to a gold standard system. The Republican-controlled House of Representatives passed a bill including such a commission in both 2015 and 2017, but both times the proposals died in the Senate. Last year, Alexander Mooney, a Republican representative from West Virginia, took that a step further when he introduced a bill proposing a full-on return to the gold standard. (The bill has no cosponsors and, unsurprisingly, has gone nowhere.)

Today, with inflation unusually low and stable, the gold standard is a tougher sell than it once was. But as trust in American institutions wanes, there is renewed support for money backed by something tangible, not the say-so of the government. If inflation picks up once again, a solid base of gold standard evangelists is ready to take it mainstream. That a supporter of the gold standard may yet wind up on the Fed’s board of governors is yet more evidence that the idea’s prospects are shining brighter than they have in many years .

How the gold standard works

Money depends on trust—the faith that it will hold its value so that, when the time comes to spend it, it will be accepted without question in exchange for what the holder expects it to be worth. Inflation eats away at that value. 

In modern times, governments are often a culprit behind inflation. Since they enjoy a monopoly on printing money, they can issue new currency at virtually no cost. But governments are run by vote-seeking politicians, who might print more money to juice short-term growth needed to win re-election, inadvertently causing inflation to flare up later. This quandary isn’t theoretical, and has happened with surprising frequency throughout history. To cite a recent, prominent example, US president Richard Nixon bent to this temptation (pdf) during his 1972 re-election campaign—contributing to the breakout of inflation that ravaged the American economy throughout the 1970s and early 1980s.

There’s a seemingly easy fix: Take the power of money creation out of the hands of politicians. According to the monetarist theory popularized by economist Milton Friedman in the 1970s, preventing inflation requires fixing the supply of money. The gold standard, by limiting the dollars the government can print to the weight of gold it holds in reserves, is one way of doing so.

The US adopted the gold standard in 1879, when Congress finally followed Britain, Germany, France, and other advanced nations. By holding national currencies stable against gold, the international embrace of the gold standard encouraged foreign investment and facilitated trade, giving rise to the first era of intense globalization.

Here’s a very cartoonish version of how it worked: The US Treasury agreed to redeem a set weight of gold in exchange for a fixed number of dollars, and vice versa. During the classical gold standard era—from 1879 to 1914 in the US—one troy ounce of gold fetched $21.

The gold standard’s discipline came from the fact that the government had to be sure it held the necessary volume of gold in reserve, in case anyone wanted to exchange dollars for a set amount of the shiny metal. If it printed more money than it held in gold reserves, the state risked hyperinflation or causing a financial crisis by shattering faith in the solidity of its currency.

In theory, the gold standard, therefore, limits government spending to only what it can raise in taxes or borrow against its gold reserve, and prevents it from simply printing money to pay its debts. It also takes power over the money supply away from central bankers. Indeed, it might render central banks mostly unnecessary. Bear in mind that for most of the classical gold standard era, the US didn’t have a central bank, which was introduced in 1913.

Signs of the “Transitional Economy”

Since President Trump has come into office he started to set this up, he got rid of the TTP, put Tariffs on China, reworked NAFTA, began deregulation’s (roughly 25’000 regulations!), working with India and other allies to decouple from China, helping BREXIT with trade deals outside of the EU, the list goes on and on and would be unrealistic to be comprehensive here as each week we see more evidence. The Senate Judicial committee has given the green light to Judy Shelton to be on the board of directors. Shelton’s been very vocal about the switch to sound money, and part of her plan was to absorb the FED into the national treasury, returning the power to the United States and not it’s international bankster progenitors.

The NYT (a globalist propaganda rag, track back to the CFR and other elite international think-tanks) was quick to seed people with doubt against her, reporting:

“…One question that analysts are pondering is what version of Miss Shelton will show up to work at the FED if she gets the job? A Gold Standard proponent or not? A supporter of lower rates, as she has been during Trumps administration or an inflation hawk?”

-New York Times

They seem concerned about what she is going to do, and they probably should be. We will be covering this going forward as it is a huge crux in the silent war. Keep an eye on Gold and Silver.