3 Minute Gold News

A Quick Read for Busy People

An article synopsis of Jim Rickards, New York Times bestselling author of The New Case for Gold, The Death of Money, Currency Wars and The Road to Ruin, with Alison Vekshin of CNN International.

Jim is the Editor of Strategic Intelligence, Chief Global Strategist for Meraglim Inc., former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and U.S. Department of Defense.

by: Elaine Diane Taylor

Topics:

Russian Sanctions
Gold
US Dollar World Reserve Currency Status
New Axis of Gold
Cryptocurrencies
Alternative Payment Systems

Jim Rickards

Link to vidcast

RUSSIAN SANCTIONS

The Russian economy is the 12th biggest in the world and it’s one of the three largest natural resource exporters. So US sanctions are having some effect but the Russian Central Bank is handling the situation very well.

It’s important to note that this is a two-way street. There’s a little truth in the idea that the US is omnipotent and can throw sanctions on Russia to get what they want, but Russia is pushing back.

Putin’s not the kind of guy to stand still and take it.

Russia’s response to sanctions is asymmetric (so not in the same way as the US). They meddled in the 2016 election, they’ve done cyber financial warfare, they’ve put sanctions on the U.S. But Russia’s most important response has been to dump US Treasuries and to buy gold in order to get out from under the US dollar hegemony.

This is a financial war and it’s been going on for a long time.

GOLD

Russia added almost 29 tonnes of gold to its reserves in July. Their central bank now owns gold worth an estimated $76 billion.

This helps Russia against these sanction.

Russia just passed China in their gold buying and so that’s caught the attention of many. Plus they’re getting close to accumulating the nice round figure of 2,000 tonnes.

Russia has been accumulating physical gold for ten years now.

Ten years ago their reserves were 600 tonnes of gold and now they have almost 2,000 tonnes.

They’ve tripled their holdings.

The gold market is funny because while it’s liquid, so you can always buy or sell, it’s also thinly traded.

That means buying and selling can impact the market easily and change the price. (You don’t want to buy too much too fast because others will rush in and start buying also and the price will lift quickly because of it.)

Russia has a standing order to buy gold. They’ve let their dealers know that they want to buy consistently but not too much at once. So they buy 10 tonnes or 20 tonnes; a small amount every month.

They’ve been transparent about it, which is smart, so they don’t shock the market.

But 10 – 20 tonnes a month for ten years is how they got up to 2,000 tonnes. This has been going on for a very long time.

In 2009 Jim facilitated a financial war game for the US Pentagon, and he warned the Pentagon at the time that countries would start accumulating physical gold.

He got laughed at by the Harvard professors but it’s turned out to be exactly right.

US DOLLAR WORLD RESERVE CURRENCY STATUS

The dollar’s position right now is very strong. About 60% of global reserves are held in US dollars. It’s about 80% of global payments and almost 100% of global oil pricing.

You could look at that and say it’s impregnable and you can’t take it down.

But you could have said something similar about the United Kingdom’s pound sterling in 1913. Then within a year, with the outbreak of World War I the pound sterling was already into a long term decline. By 1944 at Bretton Woods it was almost a footnote.

So these things don’t change overnight, but they can change quickly.

THE NEW AXIS OF GOLD

What’s important is that Russia is adding to their gold reserves. So is China. So is Turkey. So is Iran and others.

Jim has talked to high up officials at the Pentagon, the Treasury and the Federal Reserve. The Pentagon understands what Jim’s saying but they don’t have any authority over the dollar. The Treasury seems to be asleep at the switch, and the intelligence community is lethargic about gold.

Jim talked to the highest ranking officer in the intelligence community and the officer said, “Oh well, somebody’s got to own it.” Like it was a yard sale or used furniture sale, and no big deal.

The big picture is that all of these countries are trying to get out from under the US dollar hegemony.

And that’s going to happen.

When it does the power of the US to impose sanctions will be gone.

They are all building alternative payment systems to the US dollar system of SWIFT.

The German foreign minister said the other day that Germany needs an alternate payment system.

CRYPTOCURRENCIES

One way for these countries to get out from under the US dollar payment system is to create their own cryptocurrencies.

Not Bitcoin (Jim doesn’t like for reasons covered in past 3 Min. Gold News blogs), but they could use a cryptocurrency with distributed ledger between China and Russia – imagine a Xi coin and a Putin coin – denominated in SDRs (Special Drawing Rights), which is the world money that is created by the IMF (International Monetary Fun).

They could back their new digital coins with gold. And the US dollar would not be involved in that scenario.

This could happen if the US doesn’t reassert dollar hegemony.

One good way for them to do this would be for the US to buy more gold. Jim doesn’t expect them to do this but that would be part of his advice to them.

ALTERNATE SYSTEMS

These alternate payment systems are being created right now. It’s not science fiction and it could affect the US dollar very rapidly.

Jim Rickards can be found on Twitter and at James Rickards Project.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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Gold is at $1,210.40 U.S. per ounce.

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My thoughts…

We work as closed system groups and as individuals, and the power of us humans is that we can join and leave a group for strength or individuality. This plays a big part in our microcosm lives and macrocosm environments. Including world trade.

Looking at who joins with whom tells us how strong they can be as a united force, and how quickly they can move.

As Rudyard Kipling said, “The strength of the Pack is the Wolf, and the strength of the Wolf is the Pack.”

That’s quantum mechanics right there in literature.

Quantum meaning a quantity. A group of some things working as one.

In quantum physics, you can never know what an individual particle (or person) will do, but you can know with quite a lot of certainty what a group acting as one closed system will do.

The group has economies of scale by sharing resources and moving as one large unit, and yet there are diseconomies of scale where as an individual you can make changes faster, and be more nimble and innovative.

We all give up personal freedoms to get the advantages of being in a group.

We all have seen or been part of a closed system that uses persuasion to gain members and strength. We’ve seen or been a part of abuses to the mind in order to try to keep individuals in a closed system against their personal interest.

As the closed system we call nations has evolved, we come to the stage in the rise and fall where those with power inside the system loot for their personal benefit with almost no fear of consequences.

Those at the top cover for others at the top, or else the whole system will come down and they’ll be worse off. They can be threatened by others at the top if they leave the system and expose the looting.

Once the system is so broken it can’t sustain itself you have two choices: you loot the hell out of it and leave before the masses find out, or else you build a new system without alerting the masses that they’re being sheered like sheep.

If the masses act as one for their group benefit they’re more powerful than the elite working as one for their own benefit. But it’s tricky to get the masses to agree on anything. Those with power must keep the larger group confused, angry, tired and without hope.

The current system loots of the host masses like a virus – about to kill the host and move on. But it’s now trying to create a new system where it’s just a parasite – feeding off the masses in a slow drain that doesn’t kill the host, it just takes it’s resources without being found out.

So the looting usually drains the system from within until the group is either too weak to withstand an attack from without, or else the smaller sub-groups inside the system see the lack of leadership strength and fight with each other for resources.

Either way the system no longer lives the way it did. It’s gone. The host masses just aren’t aware yet because they’re promised payment in the future. They have no control so feel they have no choice but to trust the words of the virus that’s feeding off of them.

It’s lately been called ‘gaslighting’. Convince the victim that what they see is not what is really going on. Keep saying it and persuade them to stop trusting their own judgement.

Here comes the power of media. The power of persuasion. The power of media’s “one-to-many” mainstream being controlled by a handful of individuals.

The advance in digital communication makes the idea of physical nations based on geography much less of a thing. An individual can physically reside anywhere on earth or off geographically and yet be connected as a unit with someone almost anywhere else.

Physical capital as a nation’s advantage is not longer as big an issue. People move and their presence can move instantly.

A presence in the digital world needs a medium, being electricity, just as a presence in the material world needs air for sound waves and bodies to move..

Humans have moved on now from using air with sound waves and physical clubs and fists to dominate, and then to written symbols and the printing press to dominate ideology and group masses for strength, and now on to electricity and the instant movement of images, sound and symbols.

Communication no longer moved in a linear narrative of words and story down a ribbon of highway like a car. Electricity has brought us a field all at once. The switch is turned on and light all around, with its visual input, is all at once.

Materials have become digital and can move all at once. Including money.

Haivng control of the movement of the fastest communication always gave control over the larger group.

The British Empire controlled the shipping lanes and had the ruling empire of their time. The United States controlled the air and had the ruling empire of that time.

New technologies have developed to take us out into space. Who will rule space as humans expand into a greater geographical area?

There is a race going on between nations and a few non-nation state actors.

Money is a symbol of communicated value. That’s what it is. It’s a physical or digital object as a unit that is compressed in time and space so we can communicate and trade it.

Money has changed as communication has change. From feathers to shells, to gold to paper to electronic digits.

But the movement of the communication of value that hasn’t changed.

Do we trust it? It only works when the majority trust the system.

A government creates fiat currency to move it’s money. It used to move physical money and then discovered that the threat of force and the confidence in the ability to play out that force means a piece of paper with a number means it represents that unit as stated.

Fiat means a thing is created merely by the statement that it is. A government has the power to do that with money.

Our individual power joined with others is the power of the group. Strong individual equal a strong group system in the long term. As the system goes through the cycles of expansion and contraction, around the seasons of a spring, summer, fall and winter, the individuals alternate between individual advantages of quick movement and innovation for the benefit of the group, to acting as one for the group advantages of bulk strength and shared resources.

Here’s the problem we’re looking at in the current ruling empire system. Individuals with power have looted for personal gain at the expense of individuals with less money and power. If you do this for too long the system collapses from exhaustion. A normal contraction in the market was diverted in 2008 by those with power, so that they could individually still accumulate at the expense of the masses.

They created artificial money not backed by the production of the masses. In effect borrowing from the future.

They created a debt obligation and not actually money – just a promise to finish the transaction in the future with money. It’s obligations backed by obligations backed by obligations.

And at the end of the line is the nation’s ability to settle the obligations with the very material they all trust – gold. Just gold.

They added time to the envelope containing all the world’s GDP value. Then they added bets on the delivery on time. Then bets on the bets. The derivatives in the financial world have created obligations that can’t be paid off with the current system. There isn’t enough gold to settle it all. Or rather, the price of each unit of gold isn’t high enough to cover the promises.

Because the system is based on fiat, meaning a declaration based on confidence that the ones creating the money have the power to do as they say, it means there must be confidence in the future ability to pay.

Do we have confidence in the future ability to pay up?

Depends on who you ask.

If you make the pie bigger. You could fly into space and harvest the asteroids, creating more physical material and GDP and then the current system could keep going. Hence the new space race.

If you can’t bring in the space metals fast enough to pay enough debt to make a critical mass of humans feel secure then there will be a problem.

There is so much debt in the global system that there is not enough ability to ever pay. Too many promises and not enough trusted money to fulfill.

So who will get what was promised and who will be left with nothing?

The ones who see how many pieces of pie are left in the pan and how many have been promised, and take the pie on a plate instead of a future promise for a bigger piece of pie will get what was promised.

The rest will hold out for greed and have nothing. Or something like what is happening in Venezuela, where there were zeros lopped off the amount they owned.

That problem means that at some point, the exact moment no one knows, there will be a tipping point of non-confidence and some small player will stop trusting he or she will eventually be paid back what they’re owed.

They will ask for a pay out now instead of holding out for a bigger amount.

They will quietly be paid.

Someone will see them be paid and get nervous and ask for their money pay out.

And someone will see that. It will grow exponentially in demand because the globe is a complex system. So all is fine until a few people want to get off the ride. Then there will soon not be enough left to keep paying the amounts promised.

For nations, the last item on a long list of derivatives is physical gold. When there is zero trust in a system then nations know they can use gold to trade for what they want and need.

Gold is each nation’s real money. They trade it at their central bank’s bank, called The Bank for International Settlements.

Gold is trusted because it can be melted and remelted. It is virtually indestructible, and after the initial mining which takes forever, it then lasts and lasts. It is not branded and is virtually indestructible. It is element 79. It is virtually inert.

It is the same now as it was when it came from the stars, so it can be stored virtually forever without deteriorating.

Individual homes are the same as nations when it comes to banking. They’re just not used to thinking about it that way now.

If those with power come to the place where they see other nations and powerful players getting out of derivative trust arrangements and moving their physical money and gold close to home, they will begin to do the same as a protective measure. Everyone knows the game ends in tears and not everyone wins. But if they hold out they might get a little more than if they got out now.

But it is not in their best interest to have everyone cash out into real money instead of promises to pay in the future.

If more people want physical gold then the price of gold will go up. No one wants the price to be expensive when they buy it.

To accumulate enough gold to protect yourself if the whole globe stops trusting the current financial system, you hope to accumulate the metal quietly before there is a rush to get what was promised now instead of holding on for later.

The rush on gold will send the price up through the roof as the complex system is not just nation to nation now, but is globally interconnected. There will be a shortage as there isn’t enough gold at the current price to cover all the promises. You will be left still holding a handful of promises written on paper.

Then the rules will be changed in something like a foreclosure. Pennies on the dollar for your paper promises to then be cashed out.

Best to transfer those promises to hard, I-don’t-trust-you gold before the rest of the players start.

Is this happening in the world?

Have nations started buying I-don’t-trust-you physical gold?

Yes, Russia and China have been quietly buying gold, and most recently increasing at a faster pace. Other nations, like Turkey, are also buying.

Can a new system be created by the same players if the old one is faulty?

Depends on who does the creating and on how bad the lack of confidence is.

If the masses stop trusting they will panic and run to the banks to withdraw their ‘promise to pay’ bank balances into cash.

The banks have created safeguards for themselves where they can freeze up accounts and drizzle out the cash owned by the depositors. Much has been written lately about bank bail-outs and bail-ins.

If the world leaders see this coming what would we see them doing now?

They would be making new allies, creating another system that will work if the present one stops. They will bring gold they own close to home and stop holding it in other nation’s hands.

Do we see this? In spades.

So why is gold quiet? Why is the world quiet?

A concerted effort by those with power to keep the masses calm while they secure themselves financially would include the use of all media and methods at their disposal. All methods including all ways of communicating. All forms of persuation. All forms of gaslighting.

Physical persuasion would come when the social and mental persuasion stopped working.

That’s where things are heading.

More promises than ability to fulfill. Less and less trust in the current financial system to pay what is promised in the future.

Quiet accumulation.

A fight over smaller and smaller amounts of money using trade wars, currency wars and sanctions.

Increasing talk over who is allied with whom. Quiet meetings. Loud meetings.

Each one benefits those attending.

Each meeting is held to define who is in your wolf pack and who is not. What their strength or threat is to your pack. What has value and how to get more or it.

Trust is devolving as the macro system is reaching it’s maximum swing of the pendulum. Expanding and contracting. When it starts to swing back the world will quickly jump into the only thing everyone can trust. The only thing that doesn’t change and doesn’t require trust.

The bigger monetary world values gold.

Just gold.

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I’m currently in Vancouver, British Columbia. Just back from the Gold Rush Trail where I received my latest batch of beautiful pure gold flakes and small nuggets for the ‘Wild Luxury’ collection of pure natural gold jewelry. Working hard. Hiking in the wilderness. Out on Okanagan Lake (smoke, smoke, smoke from the wildfires).

The first round of printing is at the boutique letterpress printer in Vancouver. Very exciting. Ethically sourced and fair paid gold, ethically sourced and recycled packaging that’s all handmade with care. Hand forged glass with gold straight from the rivers of the British Columbia Cariboo Gold Rush Trail.

Beauty. Wealth, Radiance. Clarity. Light. Health. Honour. Compassion. Love.

Gold.

Elaine Diane Taylor~

August 27, 2018

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Coins and Crowns

words and music Elaine Diane Taylor
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

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Thank you to Jim Rickards for including me in his bestselling book The New Case for Gold.

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A Terrible Breeze (North Korea and Nuclear War)

The news comes down
A little bluebird sings
Words of war
Fire and furious things
Of testing might
‘Til no patience knows
If keeping still
Still keeps you safe at home

It’s a terrible breeze
They speak of today
Of threats that used to live a world away
We all know wind
Can blow both ways
And a terrible breeze can blow it all away

A worldwide net
Sees our village grow
Until we all forget
What each one used to know
How a blind bird’s wings
Can reach the shore
And turn the wheel of peace and war

Village fools sinking down, down, down
Debt and gold wound in numbered shrouds
Deal of a life it’s bread and clowns
Can we afford another go around?
The news comes down.

It’s a terrible breeze. The news comes down.

Single available on iTunes

I am thrilled about the peace summit and new ways of thinking about the future.

So amazing.

No one wants to turn that wheel of peace and war.

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Not Much of a Holiday (Greek Debt and Media Persuasion)

words and music Elaine Diane Taylor

SOCAN/ASCAP

Single available on iTunes

The Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.

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Preparing for the Fall live boutique album available on iTunes — featuring Wag the Dog, Black Swan Dive, American Pie and Gods of the Copybook Headings.

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The Gods of the Copybook Headings

words by Rudyard Kipling and music by Elaine Diane Taylor

SOCAN/ASCAP

from the album Preparing for the Fall available on iTunes

The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.

Another Week on Wall Street

words and music Elaine Diane Taylor

SOCAN/ASCAP

from the album Coins and Crowns available on iTunes

See the bankers wave their Wall Street wands and conjure piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.

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