Does China Plan To Back The Yuan With Gold And Make It The Primary Global Reserve Currency?

Chinese Renminbi Yuan - Photo by MiLu24What in the world is China up to?  Why are the Chinese hoarding so much gold?  Does China plan to back the yuan with gold and turn it into a global reserve currency?  Could it be possible that China actually intends for the yuan to eventually replace the U.S. dollar as the primary reserve currency of the planet?  Most people in the western world assume that China just wants a “seat at the table” and is content to let the United States run the show.  But that isn’t the case at all.  The truth is that China doesn’t just want to compete with the United States.  Rather, China actually plans to replace the United States as the dominant economic power on the planet.  In fact, China already accounts for more global trade than the United States does.  So what would happen one day if China announced that it was backing the yuan with gold and that it would no longer be using the U.S. dollar in international trade?  It would cause a financial shift so cataclysmic that it is hard to even imagine.  Most of those that write about the “death of the U.S. dollar” usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned.  China owns about a trillion dollars of our debt, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.  Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative.  But a gold-backed yuan would change all of that very rapidly.

And without a doubt, the Chinese government has already been very busy promoting the use of the yuan in international trade.  In a recent note, John McCormick of RBS Group stated the following…

Financial crises in the US and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5-6 billion daily – double what they were a year ago.

A number of factors suggest that the Chinese authorities want to make RMB internationalisation happen by 2015.

For China, having a global reserve currency is not just about economics.  It is also about power.

McCormick ended his recent note this way…

China’s new leadership faces a number of problems. The country’s economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound.

But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.

Similar sentiments were echoed in a recent article in the Wall Street Journal

Beijing is undertaking a long, gradual campaign to establish the yuan as a more market-oriented, international currency. China’s State Council, or cabinet, said in a statement this month that the country would draft a plan to allow the yuan to become fully convertible. Meanwhile, the People’s Bank of China is guiding the currency higher and set the median point of its permitted daily trading band last week at the strongest level ever.

We don’t hear much about these sorts of things in the western media, but the convertibility of the Chinese yuan is a very big deal.  Up until recently, the yuan was only directly convertible into dollars and yen.  But now that is rapidly changing.  So far this year, the Chinese government has entered into currency convertibility agreements with Australia and New Zealand.

So instead of having to change yuan into U.S. dollars to trade with Australia and New Zealand, now China can cut U.S. dollars completely out of the process.

But right now there is nothing that really gives the Chinese yuan a significant competitive edge over the U.S. dollar.  If Chinese authorities truly want the yuan to end up replacing the U.S. dollar as the primary reserve currency of the planet, they need to do something that will make the rest of the world want to use it.

And they could do that by backing the yuan with gold.  In fact, there are persistent rumors that China has been busily preparing for that.

For example, the Economic Policy Journal recently pointed out that Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush, is claiming that China has plans to turn the yuan into “a hard, gold-backed currency” that will have a distinct competitive edge over the rapidly depreciating paper currencies that the rest of the globe is currently using…

The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyers of gold, mainly off-market. They want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue.

The recent bilateral currency deals with Australia, France, Russia and Singapore, and many others, reflect this desire to displace the USD as the world’s reserve currency.

It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.

Other analysts are also fully convinced that the goal of the Chinese is a gold-backed yuan.  The following is what money manager Stephen Leeb told King World News recently

Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.

The move in the yuan overnight was one of the most significant upticks I have seen. Like I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that’s over 2,400 tons of gold per year on an annualized basis.

This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn’t just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese.

It’s only a matter of time before the Chinese back the yuan with gold. This will push the yuan front and center as a key element in terms of being part of the world’s reserve currency basket. China gets the message. They are doing whatever it takes to establish their dominance in the world, particularly in the commodity arena. Their currency is flying and they are importing as much gold as they possibly can.

And without a doubt, China has been hoarding massive amounts of gold.  Everyone agrees on that.  But what nobody knows is exactly how much gold China currently has stockpiled, because China is not telling anybody.

One recent estimate put China’s gold reserves at more than 7,000 tons of gold, but it could potentially be far higher than that.  When China does finally tell the rest of us how much gold they have, they will probably be just a move or two away from checkmate.

What we do know is that China is importing absolutely enormous amounts of gold right now even though China is also the number one gold producer on the planet.

According to Reuters, more than 223 tons of gold was imported into China from Hong Kong in March.  That smashed the previous record of 114 tons in December.

Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 is going to absolutely smash what we saw in 2012.

Obviously something is happening.

China is massively hoarding gold at the same time that it is trying to substantially raise the international influence of the yuan.

It doesn’t take a genius to see where all of this is headed.

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy.  Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar.  At that point you could forget about cheap gasoline or cheap Chinese imports.  Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively.  If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living.  Today, most U.S. currency is actually used outside of the United States.  If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.

So keep an eye on China, and look out for any news about the yuan.

It won’t happen next week or next month, but eventually we could see China back the yuan with gold.

When that happens, it is going to be a complete and utter financial disaster for the United States.

 

Why Are The Banksters Telling Us To Sell Our Gold When They Are Hoarding Gold Like Crazy?

Why Are The Banksters Telling Us To Sell Our Gold When They Are Hoarding Gold Like Crazy?The big banks are breathlessly proclaiming that now is the time to sell your gold.  They are warning that we have now entered a “bear market” for gold and that the price of gold will continue to decline for the rest of the year.  So should we believe them?  Well, their warnings might be more credible if the central banks of the world were not hoarding gold like crazy.  During 2012, central bank gold buying was at the highest level that we have seen in almost 50 years.  Meanwhile, insider buying of gold stocks has now reached multi-year highs and the U.S. Mint cannot even keep up with the insatiable demand for silver eagle coins.  So what in the world is actually going on here?  Right now, the central banks of the world are indulging in a money printing binge that reminds many of what happened during the early days of the Weimar Republic.  When you flood the financial system with paper money, that is eventually going to cause the prices for hard assets to go up dramatically.  Could it be possible that the banksters are trying to drive down the price of both gold and silver so that they can gobble it up cheaply?  Do they want to be the ones sitting on all of the “real money” once the paper money bubble that we are living in finally bursts?

Over the past few weeks, nearly every major newspaper in the world has run at least one story telling people that it is time to sell their gold.  For example, the following is from a recent Wall Street Journal article entitled “Goldman Sachs Turns Bearish on Gold“…

Another longtime gold bull is turning tail.

Investment bank Goldman Sachs Group Inc. said Wednesday that gold’s prospects for the year have eroded, recommending investors close out long positions and initiate bearish bets, or shorts. The shift in outlook was the latest among banks and investors who have soured on gold as its dozen-year runup has been followed by a 12% decline in the last six months.

Goldman began the year predicting gold would decline in the second half of 2013, but said Wednesday the drop began earlier than expected and doesn’t appear likely to reverse. Like others, the firm said the usual catalysts that have been bullish for gold during its run are no longer working.

Major banks over in Europe are issuing similar warnings about the price of gold.  The following is from a Marketwatch article entitled “Sell gold, buy oil, Societe Generale analysts say“…

Analysts at Societe Generale predict in a note Thursday that gold prices will fall below $1,400 by the year’s end and continue heading south next year.

They cite two main reasons:

1.  Inflation has so far stayed low and now investors are beginning to see economic conditions that would justify an end to the Fed’s quantitative easing program.
2.  The dollar has started trending higher, which should make gold prices move lower as the physical gold market is extremely oversupplied without continued large-scale investor buying.

And even Asian banks are telling people to sell their gold at this point.  According to CNBC, Japanese banking giant Nomura is another major international bank that has turned “bearish” on gold…

Nomura forecast gold prices will fall in 2013, on Thursday, becoming the latest bank to turn bearish on the precious metal which has been a favorite hedge for investors who fear aggressive monetary stimulus will lead to rising inflation.

“For the first time since 2008, in our view, the investment environment for gold is deteriorating as economic recovery, rising interest rates and still benign Western inflation (for now) will likely leave some investors rethinking their cumulative $240 billion investment in gold over the past four years,” wrote Nomura analysts in a sector note on Thursday.

A lot of financial analysts are urging people to dump gold and to jump into stocks where they “can get a much better return”.  They make it sound like it is only going to be downhill for gold from here.  The following is from a recent CNBC article entitled “Gold’s ‘Death Cross’ Isn’t All Investors Are Worried About“…

Gold is flashing the “death cross” but the bearish chart pattern is not the only thing scaring investors.

The magnetic appeal of a rising stock market has pulled some investment funds away from the yellow metal. Since the beginning of the year, stocks are up nearly 7 percent and gold is down nearly 6 percent.

But if gold is such a bad investment, then why are the central banks of the world hoarding gold like crazy?

According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964

Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.

Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gold.

This all comes on the heels of decades when global central banks were net sellers of gold.  Marcus Grubb, a Managing Director at the World Gold Council, says that we are witnessing a fundamental change in behavior by global central banks…

Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace.  The official sector purchases across the world are now at their highest level for almost half a century.

Meanwhile, insiders seem to think that gold stocks are actually quite undervalued right now.  In fact, insider buying of gold stocks is now at a level that we have not seen in quite some time.  The following is an excerpt from a recent Globe and Mail article entitled “Insider buying of gold stocks surges to multi-year highs“…

The TSX global gold index has lost about a third of its value over the past two years. The S&P/TSX Venture Exchange, stock full of gold mining juniors, hit a multi-year low this month.

Yet, executives and officers who work within those businesses are showing remarkable confidence that the sector is poised for better times.

In addition, the demand for physical silver in the United States seems to be greater than ever before.  According to the U.S. Mint, demand for physical silver coins hit a new all-time record high during the month of February.

And demand for silver coins has not abated since then.  Just check out what has been happening in April so far

The US Mint has updated April sales statistics for the first time since last week, and to no surprise, the Mint again reported more massive sales, with another 833,000 silver eagles reported sold Monday!   The April total through 6 business days is now 1.645 million ounces, bringing the 2013 total to a massive 15.868 million ounces.  In response to the continued massive demand for silver eagles, the mint also has begun rationing sales of silver eagles to primary dealers resulting in supply delays!  Just as was seen in January, tight physical supplies have seen premiums on ASE’s skyrocketing over the weekend and throughout the day, as ASE’s are rapidly becoming as scarce as 90%!

Something does not appear to add up here.

I also found it very interesting that according to Reuters, Cyprus is being forced to sell most of their gold reserves in order to help fund the bailout of their banking system…

Cyprus has agreed to sell excess gold reserves to raise around 400 million euros (341 million pounds) and help finance its part of its bailout, an assessment of Cypriot financing needs prepared by the European Commission showed.

So exactly who will they be selling that gold to?

And I also found it very interesting to learn that Comex gold inventories have been falling dramatically over the last few months.  The following is from a recent article by Tekoa Da Silva

A stunning piece of information was brought to my attention yesterday. Amid all the mainstream talk of the end of the gold bull market (and the end of the gold mining industry), something has been discretely happening behind the scenes.

Over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 (roughly the beginning of the bull market).

In particular, something very unusual appears to be happening with JP Morgan Chase’s gold…

JP Morgan Chase’s reported gold stockpile dropped by over 1.2 million oz.’s, or rather, a staggering $1.8 billion dollars worth of physical gold was removed from it’s vaults during the last 120 days.

So what does all of this mean?

I don’t know.  But I would like to find out.  Someone is definitely up to something.

Meanwhile, the central banks of the globe seem determined to put their reckless money printing into overdrive.

For example, the Bank of Japan actually plans to double the monetary base of that country by the end of 2014 as a recent Time Magazine article described…

On Thursday, the new governor of the Bank of Japan (BOJ), Haruhiko Kuroda, announced that the central bank would double the monetary base of the country — adding an additional $1.4 trillion — by the end of 2014 in an attempt to end the deflation plaguing the economy. To achieve that, Kuroda will buy government bonds and other assets to inject cash into the economy — what has now become familiar as quantitative easing, or QE — to bump inflation up to a targeted 2%. The plan is part of a greater strategy ushered in by new Japanese Prime Minister Shinzo Abe to restart the economy through massive fiscal and monetary stimulus. It also expands on the efforts by the Federal Reserve, Bank of England and European Central Bank to stimulate growth and smooth over financial turmoil by infusing huge sums of new money into the global economy.

Many in the western world have been extremely critical of this move, but the truth is that we actually started this “currency war”.  The Federal Reserve has been recklessly printing money for years, and even though we are now supposedly in the midst of an “economic recovery”, the Fed is actually doing more quantitative easing than ever.

Anyone that thinks that gold and silver are bad investments for the long-term when the central banks of the world are being so reckless should have their heads examined.

However, I do believe that gold and silver will experience wild fluctuations in price over the next several years.  When the next stock market crash happens, gold and silver will go down.  It happened back in 2008 and it will happen again.

But in response to the next major financial crisis, I believe that the central banks of the globe will become more reckless than anyone ever dreamed possible.  At that point I believe that we will see gold and silver soar to unprecedented heights.

Yes, there will be huge ups and downs for gold and silver.  But in the long-term, both gold and silver are going to go far, far higher than they are today.

So what do you think will happen to gold and silver in the years ahead?  Please feel free to post a comment with your thoughts below…

Got Gold?

Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?

Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?Will oil soon be traded in a currency that is thousands of years old?  What would a “gold for oil” system mean for the petrodollar and the U.S. economy?  Are Russia and China hoarding massive amounts of gold because they plan to kill the petrodollar?  Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe.  This has created an overwhelming demand for U.S. dollars and U.S. debt.  But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade?  The truth is that it doesn’t take a lot of imagination to figure that out.  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.  So 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?  Of course they will never admit this publicly, but there are rumblings out there that this is exactly what is happening.

Not that you can really blame any nation that wants to get into gold right now.  News outlets all over the globe are telling us that we are in the midst of a “currency war” as central banks all over the planet race to devalue their currencies.

So why would anyone want to be in paper in such an environment?

And of course the Federal Reserve is one of the biggest offenders.  The Fed has been 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 could be endangering the petrodollar.

But the truth is that the Fed is endangering the petrodollar.  Just read some foreign news stories about the U.S. dollar.  They mock us for our reckless money printing.

In the end, our recklessness will make it very easy for the rest of the world to ditch the U.S. dollar.

At some point, it will happen.  In fact, there are persistent rumors that Russia and China actually intend to make it happen.

Many believe 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 added gold is also almost triple the weight of the Statue of Liberty.

“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.

And 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, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn’t provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PBOC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory.

As I wrote about the other day, 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.  Sadly, even though most Americans greatly benefit from the petrodollar, most of them do not even know what it is.  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.

And 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.

And Russia and China would greatly benefit from a petrogold system.

Today, 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 is.

Does it make sense that they should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions?

And now Russia even has the number one oil company in the world.  The following is from a recent article by Marin Katusa

Exxon Mobil is no longer the world’s number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp – oh, whoops. I mean the title belongs to Rosneft, Russia’s state-controlled oil company.

Rosneft is buying TNK-BP, which is a vertically integrated oil company co-owned by British oil firm BP and a group of Russian billionaires known as AAR. One of the top-ten privately owned oil producers in the world, in 2010 TNK-BP churned out 1.74 million barrels of oil equivalent per day from its assets in Russia and Ukraine and processed almost half that amount through its refineries.

With TNK-BP in its hands, Rosneft will be in charge of more than 4 million barrels of oil production a day. And who is in charge of Rosneft? None other than Vladimir Putin, Russia’s resource-full president.

And Russian gas giant Gazprom supplies a huge percentage of the natural gas that Europe uses…

Gazprom, the Russian state gas company, already has Europe wrapped around its little finger. Russia supplies 34% of Europe’s gas needs, and when the under-construction South Stream pipeline starts operating, that percentage will increase. As if those developments weren’t enough, yesterday Gazprom offered the highest bid to obtain a stake in the massive Leviathan gas field off Israel’s coast.

Gazprom in control of Europe’s gas, Rosneft in control of its oil. A red hand stretching out from Russia to strangle the supremacy of the West and pave the way for a new world order– one with Russia at the helm.

Russia and China have a tremendous amount of leverage when it comes to energy.  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?

Of course if that happened 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.

The other day I wrote an article entitled “Show This To Anyone That Believes That ‘Things Are Getting Better’ In America” which 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.

So 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.

Gold

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