Moscow And Beijing Join Forces To Bypass US Dollar In Global Markets, Shift To Gold Trade

Tyler Durden's picture

The Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade.

According to the South China Morning Post the new office was part of agreements made between the two neighbours "to seek stronger economic ties" since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.

According to Dmitry Skobelkin, the deputy governor of the Central Bank of Russia, the opening of a Beijing representative office by the Central Bank of Russia was a “very timely” move to aid specific cooperation, including bond issuance, anti-money laundering and anti-terrorism measures between China and Russia.

The new central bank office was opened at a time when Russia is preparing to issue its first federal loan bonds denominated in Chinese yuan. Officials from China’s central bank and financial regulatory commissions attended the ceremony at the Russian embassy in Beijing, which was set up in October 1959 in the heyday of Sino-Soviet relations. Financial regulators from the two countries agreed last May to issue home currency-denominated bonds in each other’s markets, a move that was widely viewed as intended to eventually test the global reserve status of the US dollar.

Speaking on future ties with Russia, Chinese Premier Li Keqiang said in mid-March that Sino-Russian trade ties were affected by falling oil prices, but he added that he saw great potential in cooperation. Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon.

If Russia - the world's fourth largest gold producer after China, Japan and the US - is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.

* * *

Meanwhile, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday. 

"The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation," Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said.

"The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries," he added according to.

Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.

* * *

Bypassing the US dollar appears to be paying off: according to the Chinese State Administration of Taxation, trade turnover between China and Russia increased by 34% in January, in annual terms. Bilateral trade in January 2017 amounted to $6.55 billion. China’s exports to Russia grew 29.5% reaching $3.41 billion, while imports from Russia increased by 39.3%, to $3.14 billion. Just as many suspected, with Russian sanctions forcing Moscow to find other trading partners, chief among which China, this is precisely what has happened.

The creation of the clearing center enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly.

In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People's Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.

One of the most significant measures under consideration is the previously reported push for joint organization of trade in gold. In recent years, China and Russia have been the world's most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.

"We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets," First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia's TASS news agency.

In other words, China and Russia are shifting away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.

Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China - which has been the biggest accumulator of gold in recent years - likes it.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
VWAndy's picture

 I thought this was an april fools gag.

YouOweMe20Trillion's picture

What's next?

Does the US thinks that Russia and China are Lybia? 

VWAndy's picture

 Yall understand we could beat the fiat with a handshake?

Goldennutz's picture

This is it!!!

Gold to da MOOOONNNNNN!!!

Any day now...blah...blah. ..blah. ...

The CRIMEX shorts will be carried out on stretchers...blah...blah...blah.

 


rbblum's picture

Mankind's first and foremost lesson should be that education (pursuit of due diligence . . . research and exploration . . . knowing and understanding) is a lifetime endeavor. 

Sadly, in due time, the USD is going down . . . HARD. . . . because the majority know not what they do not know. . . and understand.

Jungle Jim's picture

It's not making gold go up any that I can see. In fact I think it just went down a little.

milking institute's picture

Dumbest comment of the day,congratiulations!

Cutter's picture

The stupidity and shortsightedness of the US using its dominance of the world financial system as a weapon against other countries, even down to the level of sanctions on individuals, cannot be overstated. It's the corporate equivalent of McDonalds trying to destroy Burger King by spreading rumors of a mad cow outbreak. Would be effective in damaging whopper sales, but would certainly destroy The Big Mac.

And there is no return from this. Faith in the US to administer the financial system fairly is gone and will not return. No amount of handholding, apologies, or giving of gifts will placate a wife who found out about the mistress and has lost faith in the marriage. She may accept in apology the fur coat and diamond ring, but she will be plotting secretly with the lawyer how to take everything you have in the divorce.

China and Russia are well on their way, the only question is how long the divorce will take, and how badly we will be hurt.

Latitude25's picture

I like your mad cow analogy.  This has bothered me since day one when US tax avoidace and other financial regulations started attacking the rest of the world.  This is why the Russians and Chinese are putting together alternatives.  Faith is already gone and NOTHING can get it back except gold.

MaskOfZero's picture

While there is a bit of cash circulating in the world, most money is a series of 0's and 1's stored inside computer storage devices.

What is the difference between a hard earned series of 0's and 1's and a series of 0's and 1's created by the Fed for instance?

Don't look at gold for the answer.  Gold will spike from time to time, as it temporarily escapes the control of the central banks, but gold reflects inflation too accurately, and reveals the wealth destruction of central banks and destroys the dream vision of prosperity sold by the economic elites.  The Fed and central banks have been 'leasing' gold for years to manipulate the market, while ostensibly making dead money earn interest.

A great deal of the value of any fiat currency is based upon the confidence of investors in the value of the underlying assets--which in this case is the country who issues the currency, relative to any other viable currency option.

China's currency is going for a fall since its trade surplus with the US and other countries will be falling dramatically.  Don't even mention the ruble or the yen.  The Euro is also going for a fall.  Bottom line is money is a coward, and when times are tough, it will gravitate to the safest location it can find.  The default panic currency remains, and will remain the US dollar.

 

 

 

Shane11's picture

Yes the default is the US dollar for now. The deep state will go to war to protect it. However in my opinon any major war started by the US will lack the support of the people. And that could be the trigger for the loss of confidence in the fiat dollar. 

milking institute's picture

Nobody is looking to Gold "as the answer", whatever that means. people buy and hold Gold as a insurance policy against currency and market turmoil. it's not that difficult to understand is it?

milking institute's picture

Gold market open for a hour AAND like clock work on EVERY Sunday the mysterious monkey hammer gets brought out.  unfortunately (for some),every slam down is now instantly bought up! damn,we need bigger monkey or bigger hammer,get me the Treasury,NOW!

Shane11's picture

Two words come to mind after reading this article. James Rickards

napper's picture

J Rickards is a BSer, waste of time.

Hip2BSquare's picture

A Gold-based money supply assures that the people with the most money will have the most gold who will have the most money, and gold, and money ad infinitum. What matters for a country’s financial strength is NO INTEREST CHARGED ON THE NATION’S CURRENCY, which IS WHAT THE FEDERAL RESERVE DOES EVERY TIME FedGov asks for money to spend into the US economy. FedRes “prints” (or “types”) the money into existence, and BECAUSE, AS ALAN GREENSPAN EXPLAINED, THE FEDERAL RESERVE IS “INDEPENDENT” FROM, MEANING NOT PART OF THE U.S. FEDERAL GOVERNMENT, AND PRIVATELY OWNED BY A FEW PEOPLE, THE FEDERAL RESERVE CARTEL OF BANKERS CHARGES INTEREST ON FEDGOV’S REQUESTED MONEY AS A LOAN, ADDING TO THE NATIONAL DEBT EVERY TIME THE MONEY SUPPLY INCREASES. Sure, Audit The Fed; but MORE IMPORTANTLY RETURN THE CONSTITUTIONAL CONTROL OF THE MONEY SUPPLY TO CONGRESS, SO THE INTEREST CHARGED BY FEDRES STOPS—FEDGOV CAN NOT CHARGE INTEREST TO ITSELF. WE THE PEOPLE CAN VOTE OUT CONGRESS IF THEY DON’T SPEND OUR MONEY WISELY—WE THE PEOPLE CAN-NOT VOTE OUT THE OWNERS OF THE FEDERAL RESERVE, THE OWNERS WHO COLLECT THE INTEREST ON THE U.S. NATIONAL DEBT. https://www.youtube.com/watch?v=Sboh-_w43W8

 

gregga777's picture

The government's of all nations greatly benefit from having fiat currencies. Their central bank-issued fiat currencies allows them to steal from their citizens through stealth inflation. Even during the era of the various gold backed currencies convertibility was the first thing to disappear during wars. It happened in the United States during the Civil War with the issuance of "greenbacks". It happened during World War 1 among almost all participants. The probability that Russia and China will willingly mechanically back their currencies with gold is way overblown. Governments LOVE escaping from the discipline of gold backed currencies because it makes stealing so much easier.

anticultist's picture

Pieczenik just said dollar would continue to dominate.

Lets see, russia needs to sell energy for, paper.

China needs to sell plastic shit for, paper. Or they both have nothing and its their

best interest to continue dollar as long as they can buy useful shit they want with said dollars to build up their long term strategic strength.

 

So in that sense could be best if dollar failed to stop their use of dollars against "us". 

 

So this may be about other leverage but it doesnt have to be end of dollar yet dont get your hopes up. Now while dollar is high

relative to EU and should continue with collapsing EU I can do things like get a Ducati or Mercedes with dollars so dollar is everyones

advantage for now.

 

 

gregga777's picture

Paper gold—hundreds of ounces of paper gold vs. physical—artificially and greatly suppresses the physical gold price. So, don't complain. Everyone should view this opportunity as a tremendous favor given by the central banks and stock up on physical gold (and silver, too) while it's cheap.

anticultist's picture

I am doing something different, using a Monex account to build up silver at 3x leverage.

Now that is not solicitation or recommendation for Monex I just opened the account and dont

know much about them and sure there are other like them, just pointing out one way in addition

or after the basic amount of physical is in hand. Getting the phys in possession should be most

important but this can be efficient to and an alternative. I also do bitcoin/etherium, gold mining

stock in brokerage, bitgold/goldmoney, the whole spectrum. I cant turn in my mercedes lease for

until about this time next year but do have in mind to get a Ducati for collector piece.

I thought about the new Alfa Romeo Giulia for novelty sake but mercedes should be much better

practically and economically. I dont care if dollar works a while but of course trump doesnt want high dollar so I dont

how long we have to benefit from high dollar, basically everything is on sale to americans.

Trump is a little wrong too about us getting free shit with crap dollars, he seems to want the dollars more, but I

know that is not sustainable ends in bankruptcy and war and the pain has to be taken to get off debt dollar creditism

ponzie which if we do take that pain can rebuild sustainably in permanent constitutional property rights in permanent labor value

of sound money. We will take that pain one way or another. Well where trump is right it is not free it is quantitative easing debt,

it is negative interest rates

wiping out all generational labor (pensions), thats whey the pain has to be taken.

You dont actually need a growing gold/silver supply on sound money.

Each unit of economic growth each increment of productivity should increase the purchasing power of the "money".

Money is created by labor, only. Thus increasing the pruchasing power and permanent storage value of money/labor automatically

by growth and productivity. Which is 

deflation which deflation is the result of free market capitalism which is more for less, is falling prices.

The wealth comes from falling prices not more gold. The currency is printed equal to the units of growth or there is no tax

free usury free money in the system to trade the new units of growth.

The units of currency that is backed by fixed gold should increase with increases in productivity with a fixed gold base

it is the value of the money that is increasing with permanent growth.

But this converts all property and wealth and abundance to the people over time generationally and is antithetical to communism/satanism

central bank warfare model and was prohibited by the ruse of fake civil war "statute".

anticultist's picture

correction, anything external/foreign is on sale to americans, not federal monopoly corruption

corporations that is tuition, housing, medical.

Duc888's picture

 

 

 

"........... have in mind to get a Ducati for collector piece."

 

Which model if you don't mind me asking?

 


Spungo's picture

These articles are getting ridiculous. China is not trying to destroy the US. They are trying to hedge their bets as any responsible nation should. They trade in dollars, they trade in yen, they trade in gold, they trade in pounds, they trade in euros. They want to be part of everything. Trying to pick just 1 side is a disastrous move.

Megaton Jim's picture

Sounds like someone is itching to be "Democratized!"

onmail1's picture

Thumbs up
Yes
Stop selling to vampire west

West has been looting the rest for hundreds of years
Earlier by guns, now by atom bombs
Now west is only printing paper money
Dollar, Euro , yen , pound etc
& buying good goodies free from rest
living cozy & luxurious lives
while the workers producing the goods in rest of world
live crammed in one room houses (often with no toilets)

Its time to remove west from trade
BRICS & other 3rd world produces
huge amounts of food, clothing etc everything

DO NOT SELL TO WEST & WEST WILL CRUMBLE AWAY

Delta New J's picture

Based on my experience of having followed several tech analysts for the markets I have found this one to be the best. They show past actual trades on their blogs at www.shepwave.com/blogs and https://t.co/f3mU9N8rc4

 

 

ShepWave 

ShepWave IMPORTANT Updates for Monday Published
by ShepWave.com
Posted: 3/31/2017 19:25 EST

 

The markets are at a very important juncture currently. The technicals we are seeing need to be closely examined and understood. This applies to long term investors as well as short to mid term traders.

The markets (including equities, oil, and gold) continue to be highly predictable and therefore highly profitable. The key is to keep watching the technicals as they evolve, on a day-to-day and even week-to-week basis.

Remember when all the talking heads were screaming to SELL the election and then to SELL the inauguration?  Well, the masses--especially the talking heads anyway--typically get things wrong. Now is not the time to blindly be listening to such hog-wash. TURN OFF THE CNBC!

The Special and Regular ShepWave Updates for Monday have been published. In these updates you will find the weekly and daily time frame analysis for the major US equity indexes, as well as Crude Oil and Gold.

The Pre-Market / Intra Day ShepWave Update for Monday will be published later this weekend. This update will contain the shorter term (15 minute and 60 minute) time frame analysis.

Log In at www.shepwave.com for Monday's IMPORTANT ShepWave Updates.

qwertyFUBAR's picture

Dad: Never take investment advice from people trying to sell you gold.
Son: But today that's all of them!
Dad: Then it's too late for us. Dig in.

africoman's picture

Well seeing

One Belt One Road New Silk Road vs TPP: East and West Enter 'War' For Dominance in the world the creepy NWO is sure thing to reemerge.Merica is already put in self-destructive mode by the enemy within,double triple deep state agents.

Chain and Russia collaboration  in ditching dollar is anticipated and will continue.

Oscar Entrepreneur Venture's picture

We give out all kind of loan like Educational loan, Business loan, home loan, Agricultural loan, Personal loan, auto loan and other good Reason, I also give out loans from the rang of $5,000USD- $500,000USD at a 3% interest rate. Duration of 1- 15 years depending on the amount you need as loan. Get back to us for more information call/Text me now 407 329 4984