Jim Rickards: This Is The Only Russia Story That Matters

Tyler Durden's picture

Authord by James Rickards via The Daily Reckoning,

The World Gold Council has reported that the Central Bank of Russia has more than doubled the pace of its gold purchases, bringing its reserves to the highest level since Putin took power 17 years ago.

Russia’s desire to break away from the hegemony of the U.S. dollar and the dollar payment system is well-known. Over 60% of global reserves and 80% of global payments are in dollars. The U.S. is the only country with veto power at the International Monetary Fund, the global lender of last resort.

Perhaps Russia’s most aggressive weapon in its war on dollars is gold. The first line of defense is to acquire physical gold, which cannot be frozen out of the international payments system or hacked.

With gold, you can always pay another country just by putting the gold on an airplane and shipping it to the counterparty. This is the 21st-century equivalent of how J.P. Morgan settled payments in gold by ship or railroad in the early 20th century.

Russia has now tripled its gold reserves from around 600 tonnes to 1,800 tonnes over the past 10 years and shows no signs of slowing down. Even when oil prices and Russian reserves were collapsing in 2015, Russia continued to acquire gold.

But Russia is pursuing other dollar alternatives besides gold.

For one, it’s been building nondollar payments systems with regional trading partners and China.

The U.S. uses its influence at SWIFT, the central nervous system of global money transfer message traffic, to cut off nations it considers to be threats.

From a financial perspective, this is like cutting off oxygen to a patient in the intensive care unit. Russia understands its vulnerability to U.S. domination and wants to reduce that vulnerability.

Now Russia has created an alternative to SWIFT.

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.”

Russia is also part of a reported Chinese plan to install a new international monetary order that excludes U.S. dollars.

Under that plan, China could buy Russian oil with yuan and Russia could then exchange that yuan for gold on the Shanghai exchange.

Now it appears Russia has another weapon in its anti-dollar arsenal.

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 U.S. 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.

“Putin coins,” anyone?

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.

Comment viewing options

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

One day Jim Rickards will get something right besides selling his books. 

yomutti2's picture

Nobody fucking cares what Russia does. Their economy is smaller than many US states.

 

Raffie's picture

Russia paid off all their debt last year and a few countries that owed them, the Russians forgave the debt.

So having no debt but small economy is WAY better then the US.

yomutti2's picture

No, no it's not. The reason they can pay off the deby is that the state can seize businesses and other private assets so easily. And the egregious lack of property rights is one reason that Russia is such an economic wasteland. It's also a reason why about half of Russia's major companies keep their headquarters outside of Russia.

 

07564111's picture

you hurting bro ??

lol

auricle's picture

Like the French before Nixon closed the gold window, Russia is calling the wests BS and taking posession of real money at absurdly low prices. 

Freddie's picture

Ha Ha.  The dude says Russia's economy is smaller than many US states.  He fails to mention that most of those states are bankrupt unlike Russia.   Putin made getting out of debt a priority.   I hope they clone Putin because Medvedev is not the answer in the future.

What is so amazing is Russia had hundreds of years of evil and shit leaders including the dual shitizen zio-genocidal puppets.  God must have finally smiled on Russia with Putin. 

Dickweed Wang's picture

The reason they can pay off the deby is that the state can seize businesses and other private assets so easily. 

 

Where'd you hear that one??  CNN?? MSNBC?? 

Oh yeah, it's "debt" not "deby" you moron.

Gazooks's picture

hey, I paid off Debby

 

 

..worth every penny

J. Peasemold Gruntfuttock's picture

hey, I paid off Debby ..worth every penny

 

As one naturally 'does' through the 'Dallas' account no doubt!

 

J. Peasemold Gruntfuttock

HopefulCynic's picture

Shiit I can also invent BS, like: yomutti2 is actually a retarded double transgender jew nigger, on second thought, that sounds more plausible than your BS, so I take back the example and put this new example of imagined BS for you to consider: yomutti2 is a sensible intelligent person.

 

See I can also invent BS!

Shemp 4 Victory's picture

It's yomutti-fruitti, the alternative gifted, non-traditional lifestyle yapping mutt...

A Sentinel's picture

So what you're saying is that property ownership rights in Russia are great.

halcyon's picture

If you have not noticed the exact same asset seizure can happen in the US. Plus as a bonus you get extradited to CIA torture black site.

Sure, Russia is small, but at least it is not NWO's deep swamp.

 

HRClinton's picture

FYI... Russia's GDP is on part with Australia.

Without the crushing Debt that socialist Australia has. 

If you adjust their GDP to Purchasing Power (PPP), then they rank way higher. Right on the heels of Germany.

PrometeyBezkrilov's picture

Dude, you are obviously talking about Clive Bundy and Beurea of Land Land Management, with an additional tool in the gsngsters' arsenal called Immenent Domain, right? In addition to other financial tools for property ceasure available in the US, oh, sorry, in Russia.

G_T_A_44's picture

Sounds like you're actually describing the US.

MozartIII's picture

Ignore him. He got but hurted by some guy called Crazy Ivan. Thinks bashing Russia will help his arse pain.

yomutti2's picture

 

 For those who are curious, California, Texas and New York each have economies bigger than Russia's.

North Korea's economy is about the same size as that of Tulsa, Oklahoma.

 

https://en.wikipedia.org/wiki/Comparison_between_U.S._states_and_countri...(nominal)

 

BlindMonkey's picture

PPP is a better estimation for economic output than a pure dollar evaluation.  On that basis, Russia is going to take over the 5 slot from Germany soon (2018 is likely)

 

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

 

Interestingly, California as a state is dead ass broke.  The economy is booming in dollar terms but what do they produce?

07564111's picture

CA produces leftist retards ;)

MozartIII's picture

Not much else! There movies suck too!

yomutti2's picture

Well, they have a couple of little companies called Intel and Applied Materials that are responsible for a great big chunk of the semiconductors we're all using now. And a very large chunk of the software were all using here also comes from California.

 

BlindMonkey's picture

Semi-conductors are very cool, +1 to you.  Show me the Cat plants, machine tools, cars, tires, POL, heavy trucks, and the millions of products that are needed to keep an economy moving.  

 

I'll ask it this way, could Cal secede and weather the typical US sanctions successfully?  

07564111's picture

Is that the same Intel whose last several generations of CPUs were designed in Israel ??

Why yes it is I answers ;)

I'm thinking that Hezbollah will pay special attention to that establishment when they crush the juice.

cat2005's picture

Yet the state remains broke and broken.

BarkingCat's picture

Intel's big facility is in Oregon, not California.

PrometeyBezkrilov's picture

In addition to your argument, if a loaf of bread backed in Texas and sold on the market for $3, and in China the same bread sold for 50 cents, it doesn't mean that the US economy has 6 times bigger GDP. It also doesn't mean that 1USD should buy 6 yuans. But this is how current economic metrics work.

BlindMonkey's picture

100% on point and a much better way of expressing the metric.

TahoeBilly2012's picture

Russia has more oil, supposedly than the US/Canada combined. You are blind.

yomutti2's picture

 

Who cares? That particular commodity is going to become obsolete long before it's depleted. Which is too bad for Russia, because it almost they only thing they make that anybody wants. Like Saudi Arabia, Russia has a very dim future.

 

BlindMonkey's picture

"That particular commodity is going to become obsolete long before it's depleted."

 

And replaced by products made by Rosatom.   LOL.

Volkodav's picture

       You know nothing about this subject

 

Volkodav's picture

        Russia King of Gas

        http://windowstorussia.com/russia-king-of-gas-1-1-trillion-cubic-meters-of-natural-gas-severneftegazprom.html

 

        Russia Record Wheat Crop Harvest and World Largest Wheat Exporter

        Russian Combine Harvesters bring US Wheat Harvest:

        https://www.youtube.com/watch?v=KoGKtbFqCwI

        Rostselmash Torum 860 rebadged and fitted Cummins engine for North American Market

        Rostselmash  Rostov on Don

 

cat2005's picture

If you are talking about the threat to its demographics then I completely agree. Long term, Russia is at risk of disappearing as a white Christian culture with its unique blend of East and West. The national birth and death rates, as well as emigration, foretell a bleak future.

I hope Russia can save itself. It is going to take more than gold and a strong ex-KGB leader though.

Nexus789's picture

You are deluded. Oil is used in all types of manufacturing from agriculture to pharmaceutical products. It is the foundation of hundreds of chemicals and plastics. Burning it in engines is only one use. It won't be going away any time soon. Aside from the oil and gas Russia has massive deposits of minerals and a rapidly expanding non GMO agricultural sector. 

HopefulCynic's picture

Give it PP or get the fuck out. 

HopefulCynic's picture

Give it PP or get the fuck out. 

Raffie's picture

You can have the most toys in the world, but if you are living pay check to pay check or going under nothing matter how much you pull in because you have to pay off that debt. 

Russia also has 2nd largest diamond mine in the world still in production. Six million carats of rough diamonds in 2014 from the mine. 

http://www.dailymail.co.uk/news/article-3741956/The-expensive-hole-world...

Don't be fooled by what is known about Russian GDP, it's what is not known.

A Sentinel's picture

Look up deBeers diamond holdings (off-market inventory.)

aurum4040's picture

Simply a mirage, a slight of hand. Texas is the only state with financial intelligence - they own gold, alot of gold,  thanks to Kyle Bass. 

Jack Oliver's picture

And Russia's foreign debt - well- it's much FUCKING smaller than many US States !!

So ..........FUCK off SHILL !!!

Dickweed Wang's picture

Nobody fucking cares what Russia does. Their economy is smaller than many US states.

 

I guess none of that matters when you have the largest nuclear arsenal in the world and military tech that the west can't match (or figure out).

Akzed's picture

How many US states have that much gold?

HopefulCynic's picture

This 'nobody' guy must really be an ignorant piece of shit. I am glad you are not that guy and are here reading and commenting, it shows how much you care. 

Joiningupthedots's picture

They have a small military too according to people like you.

Yet they can still turn the entire United States inro a sheet of vitrified glass in 24 minutes or less.

So to answer your outburst; America cares a great deal about what Russia does.

Just so ya know ;)

Volaille de Bresse's picture

"Nobody fucking cares what Russia does. Their economy is smaller than many US states"

 

Think differently think outside of the MSM box : imagine countries as people. The US is a very sick 85 yo man, the EU is a very sick 75 yo man, and Russia is... a 22 yo good-looking woman.

Now place your bets for the 15-25 years to come : who you gonna rely on? the old dudes or the young energtic lady?     

 

The US (and its European valet) have been on "life support" (= massive creation of debt) since the 80's. Soon they'll die... and rebirth. But that'll take 40 years. In the meantime Russia seems like a good option if you look for a safe harbour.