So writes Michael (http://theeconomiccollapseblog.com) in edited excerpts from his original article* entitled Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?.
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Michael goes on to say in further edited excerpts:
If the rest of the globe were to start rejecting the increasingly unstable U.S. dollar and…[start using] gold…as a currency in international trade…demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before. [That being the case,] are Russia and China accumulating unprecedented amounts of gold right now because they eventually plan to cut the legs out from under the petrodollar and they want to gobble up huge stockpiles of gold before the cat is out of the bag?
We are in the midst of a “currency war” as central banks all over the planet race to devalue their currencies so you can’t really blame any nation that wants to get into gold right now….[After all,] why would anyone want to be in paper in such an environment?
- [Is the First of Many Currency Crises Just Now Unfolding? Are Gold & Silver About to Take Off As a Result?
- Coming Currency Superstorm Will Be Absolutely Catastrophic for U.S. Economy]
The Federal Reserve is one of the biggest offenders…printing money like it is going out of style, and nobody at the Fed or in the U.S. government really seems too concerned that all of this money printing is endangering the petrodollar…[and that] in the end, our recklessness will make it very easy for the rest of the world to ditch the U.S. dollar.
- [What’s Happened – and Will Continue to Happen – to the Value of the U.S. Dollar
- Peter Schiff: The Federal Reserve is Now 100% Committed to the Destruction of the Dollar
- This Chart Proves That Your Currency Is Being Debauched At An Accelerating (Parabolic) Rate! Got Gold?
- Video: What Could Happen in the First 12 Hours of a US Dollar Collapse]
At some point, it will happen. In fact, there are persistent rumors that Russia and China actually intend to make it happen [and that] that this is the reason both nations have been hoarding so much gold recently. Just check out how much gold Russia has been accumulating. The following is from a recent Bloomberg article…
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg….
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
Russia’s gold hoarding appears to have accelerated last year. According to one recent report, Russia added 3.2 million ounces of gold to their reserves in 2012 alone but of even greater concern is China. Nobody really knows how much gold China has, because they do not tell us, but all indications point to the fact that Chinese gold hoarding has gone into overdrive. The following is from a Zero Hedge article from a few months ago…
Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasurys, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold…
Nobody produces more gold than China does, and nobody imports more gold than China does. Everyone agrees that China seems to have an insatiable appetite for gold, but nobody can agree on exactly how much gold they actually have. One recent estimate put China’s gold reserves at more than 7,000 tons of gold, but it could even be much higher than that. Nobody really knows so what are Russia and China up to?
Well, for a long time both nations have expressed displeasure with the fact that the U.S. dollar is the de facto currency of the world. Leaders from both nations have suggested the possibility of adopting a new global reserve currency, but up to this point no real contenders have emerged to dethrone the U.S. dollar so for now, the U.S. dollar reigns supreme in international trade.
- Watch Out! Russia & China Stripping USD of Its Dominant Role in World Trade
- 2012: The Beginning of the END for the U.S. “Petrodollar”!
- Will the Trickle Out of the U.S. Dollar Now Become a Torrent?
For those that do not fully understand the petrodollar, the following is a good explanation of the petrodollar from a recent article by Christopher Doran…
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested and, because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.
All of this has worked out very nicely for the United States. It has created a massive demand for U.S. dollars and U.S. debt but what would happen if the rest of the world rejected the petrodollar system and adopted a “petrogold” system instead?
A recent article by Jim Willie discussed how a petrogold system might work…
The crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note. It will enable peer-to-peer payments to be completed from direct account transfers independent of currency, and most importantly, not done through the narrow pipes and channels controlled by the bankers with their omnipresent SWIFT code system among the world of banks. The Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape. Any bond or bill earning almost no interest is veritable clutter. The zero bound USTreasurys open the door in a big way for replacement by a better vehicle. The new trade notes will involve posted gold as collateral, whose entire system for trade usage will bear a massive gold core that also will include silver and platinum, maybe other precious metals. The idea is to avoid the FOREX systems, to avoid the USDollar, and to avoid the banks as much as possible in a peer-to-peer system that can be executed between parties holding Blackberry devices or simple PC to complete the payments on transactions. If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative.
Russia and China would greatly benefit from a petrogold system.
- Russia is the number one oil exporter on the planet.
- China is the number two consumer of oil in the world, and at this point
- they are actually importing more oil from Saudi Arabia than the United States [does].
Does it make sense that Russia and China should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions?…[They] have a tremendous amount of leverage when it comes to energy [so] what if they got together with a bunch of oil producing nations in the Middle East and decided to set up a system where oil is traded for gold? Would not much of the rest of the world go along with such a system?[If the above were to] happen the U.S. financial system would crash.
- We would no longer be able to export our inflation to the rest of the globe and prices would rise dramatically.
- Demand for U.S. government debt would go through the floor and interest rates on that debt and on everything else in our economy would skyrocket.
- Economic activity would grind to a standstill and
- the financial markets would collapse –
- and that would just be for starters.
Most Americans simply don’t understand that Russia and China have the power to collapse the U.S. economy by going to a gold for oil system. All they have to do is pull the trigger.
In a previous article I discussed all of the reasons why the U.S. economy is already collapsing but, as bad as things are now, this is nothing compared to what things will be like when the petrodollar dies.
Pay keen attention to anything in the news about Russia or China suggesting that oil should be traded for gold. When Russia and China pull the trigger, things will get messy very quickly.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
China continues to buy gold with both hands, keeping up all the gold they produce and importing even more! Imports were up 50% in October vs. the previous month; up 68% in November and up 74% in December. What will January bring given the continued weakness in the price of gold? Probably even more buying!
I expect the eventual endgame to this whole Keynesian monetary experiment that has been going on ever since World War II [will] finally terminate in a global currency crisis. [That being said,] I’m starting to wonder if we aren’t seeing the first domino – the Japanese yen – start to topple…[It has] cut through not only the 2012 yearly cycle low, but also the 2011 yearly cycle low and never even blinked [and should it continue its steep decline] and break through the 2010 yearly cycle low [of 105.66] I think we have a serious currency crisis on our hands. Needless to say, if the world sees a major currency collapse… it’s going to spark a panic for protection – to gold and silver. Wouldn’t it be fitting that at a time when they are completely loathed by the market they are about to become most cherished? [This article analyzes the situation supported by 3 charts to make for a very interesting read.] Words: 620; Charts: 3
Technically the U.S. left the gold standard in 1971 but, in reality, we abandoned it in 1913 with the creation of the Fed…setting the stage for the collapse of the dollar. [Given that this is] the 100th anniversary of the creation of the Federal Reserve, it seems only fitting that we should present a brief history of the U.S. dollar debasement since then. Words: 1144
In order to generate phony economic growth and to “pay” our country’s debts in the most dishonest manner possible, the Federal Reserve is 100% committed to the destruction of the dollar. Anyone with wealth in the U.S. dollar should be concerned that economic leadership is firmly in the hands of irresponsible bureaucrats who are committed to an ivory tower version of reality that bears no resemblance to the world as it really is. By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve’s Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford. Words: 1410
What would happen if someday the rest of the world decides to reject the U.S. dollar and that process suddenly reversed and a tsunami of U.S. dollars come flooding back to this country? It is frightening to think about. Just take a moment and think of the worst superstorm that you can possibly imagine, and then replace every drop of rain with a dollar bill. The giant currency superstorm that will eventually hit this nation will be far worse than that.
This is the scenario nobody thinks is possible but really at the end of the day, it’s not like the US can print money and live on debt forever right so when something cannot go on forever what happens when it stops?
Before China and Russia can boot the U.S. military out of Asia and Eastern Europe, they have to strip the dollar of its dominant role in world trade, especially of Middle Eastern oil and that’s exactly what they’re trying to do. [Let me explain.] Words: 816
Conspiracy theory notwithstanding, claims that the reserve status of the U.S. dollar unfairly benefits the U.S. are no longer true. On the contrary, it has become a burden, both for America and the world. [Let me explain.] Words: 825
Yesterday, another brick was taken out of America’s dollar fundamentals. China and Russia have announced that they intend to stop using the U.S. dollar and begin to pay for trade between their two countries in renminbi and rubles, respectively, from now on. It begs the following question: Will the OPEC countries of the Middle East follow suit in abandoning the U.S. dollar? Words: 614
Those in the U.S. power structure know what the plan is if the U.S. dollar should fail. They are not admitting publically that there is even the remotest chance that it could happen but, rest assured, there is a plan. There is always a plan. To paraphrase Franklin Roosevelt, nothing happens by chance in government, so don’t be caught up in such a ‘surprise’ event – whatever it may be and whenever it occurs. Words: 1345
Within the recent retracement of the U.S. currency there has been endless speculation about the future role of the dollar as the world’s primary reserve currency. Moreover, there has even been conjecture that the dollar will no longer exist at some point in the near future but any case made for the vulnerability of the dollar falls short when it comes to naming alternatives. Words: 631
I came to the conclusion several years ago that it was just a matter of time before the world realized that the relative functionality of the U.S. dollar was about to go belly up – to collapse – and that that time happened to coincide with that fateful date all the prophecies are going crazy about – 2012! Words: 881
Today, more than 60% of all foreign currency reserves in the world are in U.S. dollars – but there are big changes on the horizon…Some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade…[and this shift] is going to have massive implications for the U.S. economy. [Let me explain what is underway.] Words: 1583
Frustrated with what they viewed as being ignored by the West and not having a prominent role in institutions like the World Bank and the International Monetary Fund, Brazil, Russia, India, China and South Africa (also known as the BRICS countries) have held their second summit…[and declared war on the U.S. dollar. Let me explain.] Words: 572
Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works but not anymore. A shocking new report by the IMF is proposing just that – a global currency beyond national control! Words: 820