Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

The Russia Story that Really Matters

  by    0   0

We’ve heard a lot about Russian election hacking over the last year. But Jim Rickards said there is only one Russia story that really matters – that is the country’s efforts to break away from the hegemony of the US dollar and the dollar payment system that currently dominates global trade.

Over 60% of global reserves and 80% of the world’s payments are in dollars. But Russia is taking steps to free itself from dollar dominance. And As Rickards points out, the most aggressive weapon in the Russian war against the dollar is gold.

As we reported last month, gold creates a foundation for Russia and China to shift economic power from the West to the East.
At 1,700 tons, Russia’s has the sixth largest gold reserves in the world. Russian gold makes up about 17% of the nation’s wealth. In 2016 alone, the Russian central bank purchased 201 tons of gold, far more than any other central bank in the world.

Meanwhile, Russia and China have reportedly been moving closer to developing a gold-based trading system.  Last month, that became a reality when China announced the launch of a gold-backed, yuan-denominated oil futures contract. The move potentially creates a way for oil exporters to circumvent US dollar denominated benchmarks by trading in yuan. The contracts will be priced in yuan, but convertible to gold. In June, China took the first step toward establishing a “petroyuan” when it launched a direct trade relationship with Russia, allowing oil purchases to be made strictly in the Chinese currency.

In another move to establish its economic independence, Russia has reportedly created an alternative to SWIFT. The Society for Worldwide Interbank Financial Telecommunication enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar is the world reserve currency, SWIFT facilitates the international dollar system. The US has used SWIFT as a tool to cut countries off from global trade and has specifically targeted Russia. In 2014 and 2015, it blocked several Russian banks from the system as relations between the two countries deteriorated. Just last month, the US Treasury secretary threatened to pull the plug on China if it doesn’t cooperate with sanctions against North Korea. Those threats could become moot. According to Rickards:

 The head of Russia’s central bank, Elvira Nabiullina, has reported to Vladimir Putin that ‘There was the threat of being shut out of SWIFT. We updated our transaction system, and if anything happens, all SWIFT-format operations will continue to work. We created an analogous system.'”

But perhaps the biggest news is a report that the Russians are working to create a blockchain alternative that will free them completely from SWIFT and the global dollar system.

Russia’s development bank, VEB, and several Russian state ministries are reportedly teaming up to develop blockchain technology. They want to create a fully encrypted, distributed, inexpensive payments system that does not rely on Western banks, SWIFT or the US to move money around. This has nothing to do with bitcoin, which is just another digital token. The blockchain technology (now often referred to as distributed ledger technology, or DLT) is a platform that can facilitate a wide variety of transfers — possibly including a new Russian-state cryptocurrency backed by gold.”

It is clear that Russia and the Chinese are working toward de-dollarization. As economist Ronald-Peter Stöferle put it:

The world is looking for alternatives to the dollar — and finds them more and more often.”

Rickards leaves us with a pretty stark conclusion

The ultimate loser here will be the dollar. That’s one more reason for investors to allocate part of their portfolios to assets such as gold.”

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Speculation Swirls, Trial Balloons Fly: Who’s Next Up for Fed Chair?

Speculation continues to swirl around the question of who President Trump will appoint as Federal Reserve Chair when Janet Yellen’s term comes to an end in February. Trump will reportedly meet with Yellen this week to discuss the possibility of her staying on as the head of the central bank. During the presidential campaign, Trump […]

READ MORE →

Palladium Price Hits 16-Year High

Palladium probably isn’t something you think about when you consider investing in precious metals. Maybe you should. Palladium broke through the $1,000 mark on Monday. The price of the metal has spiked nearly 50% in 2017 and is at its highest level in 16 years. Related

READ MORE →

Is Silver Set to Soar?

Could silver be set to soar? Analysts Barron’s spoke with recently think so. An article published on the business journal’s website last week predicted the white metal will emerge as a winner for the second straight year. With a per-ounce price of $17.41 for silver futures as of Friday, analysts say the white metal is […]

READ MORE →

Australian Gold Mine Production on Track to Fall By Half Over Next 25 Years

Australian gold output will peak in just four years and then begin a steep decline, according to a report issued by a Melbourne-based industry adviser. According to MinEx Consulting analysis reported by Bloomberg Business, Australian mine output will max out in 2021 and then fall by half into the mid-2050s, as aging mines close down. […]

READ MORE →

Bitcoin or Gold? Do I have to Pick Just One?

People seem to enjoy pitting gold and Bitcoin against each other. But do I really have to pick just one? While cryptocurrency and precious metals have many similarities, in many ways they are polar opposites. And you can have both. Related

READ MORE →

Comments are closed.

Free Newsletter & Notification of Special Deals
RSS Feed
LINKEDIN
YouTube Channel
YouTube Channel
Google+
Google+
https://schiffgold.com/key-gold-news/russia-story-really-matters
Call Now