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Asia
by
Adam Taggart
by
Alasdair Macleod
Executive Summary
- The West is extremely vulnerable to financial and currency de-stabilisation through precious metals
- Access to energy supplies will be the real weapon used in the battle over Ukraine (and future geo-political wars)
- Why sanctions against Russia will not succeed
- The East is mobilizing to become less dependent on the West
If you have not yet read Is Part 1: Ukraine: A Perspective from Europe available free to all readers, please click here to read it first.
Russia’s strategy towards Ukraine appears to be to ensure NATO is excluded from Ukrainian territory, the irony being that if NATO members hadn’t interfered with Ukrainian politics in the first place the current crisis would not have occurred. As it is, at a minimum she will seek to secure Donetsk and Luhansk and force the Kiev government to drop any ambitions to join the EU economic bloc.
The fact that NATO is divided between on the one side the US and UK plus all its ex-communist members and on the other the great European welfare states, requires there to be two distinct levels of Russian strategy. They must not be confused with each other, one macro and the other micro.
Macro-Geopolitics Linked To Gold
At the higher level there is the geopolitical clash with the US. This is not just a matter of Ukraine, but it is rapidly becoming the Shanghai Cooperation Council versus America. The US is also embroiled in territorial disputes between its allies and China over mineral rights in the South China Sea. The Middle-East now sells more oil to China than the US, and by leaving the US sphere of influence will fall increasingly under the SCO’s spell. Presumably, America has woken up to the threat to its hegemony from the powerful alliance that is the SCO, together with the loss of Pakistan and India into that sphere of influence. It goes further: even Turkey, a long-standing NATO member, plans to defect to the SCO, apparently a personal project of Recep Erdoğan, the recently re-elected Prime Minister.
American-initiated actions against Russia will probably be kept by Russia and the SCO in this big-picture context. It will be treated as an attack against an SCO member, speeding up integration and trade agreements designed to exclude the US dollar as a settlement medium. In this context the SCO members already appear to have agreed on the need to increase gold ownership as an undefined part-solution to replace the US dollar as the currency standard. In other words, the rush to acquire above-ground gold stocks will continue, and China through her refiners is processing and keeping increasing quantities of African-sourced gold as well as her own which would otherwise have gone to the West.
The Russian central bank has been adding to her monetary gold reserves and officially now has more than China (though China is known to have substantial holdings of bullion not currently declared as monetary reserves). All mine output is likely to be absorbed by the State. Russia has continued to build her gold reserves at a time when it could be argued by western analysts that she needs to hold on to all her foreign currency, given the prospect of escalating sanctions. The truth is that…
The Rise Of The East
PREVIEW by Alasdair MacleodExecutive Summary
- The West is extremely vulnerable to financial and currency de-stabilisation through precious metals
- Access to energy supplies will be the real weapon used in the battle over Ukraine (and future geo-political wars)
- Why sanctions against Russia will not succeed
- The East is mobilizing to become less dependent on the West
If you have not yet read Is Part 1: Ukraine: A Perspective from Europe available free to all readers, please click here to read it first.
Russia’s strategy towards Ukraine appears to be to ensure NATO is excluded from Ukrainian territory, the irony being that if NATO members hadn’t interfered with Ukrainian politics in the first place the current crisis would not have occurred. As it is, at a minimum she will seek to secure Donetsk and Luhansk and force the Kiev government to drop any ambitions to join the EU economic bloc.
The fact that NATO is divided between on the one side the US and UK plus all its ex-communist members and on the other the great European welfare states, requires there to be two distinct levels of Russian strategy. They must not be confused with each other, one macro and the other micro.
Macro-Geopolitics Linked To Gold
At the higher level there is the geopolitical clash with the US. This is not just a matter of Ukraine, but it is rapidly becoming the Shanghai Cooperation Council versus America. The US is also embroiled in territorial disputes between its allies and China over mineral rights in the South China Sea. The Middle-East now sells more oil to China than the US, and by leaving the US sphere of influence will fall increasingly under the SCO’s spell. Presumably, America has woken up to the threat to its hegemony from the powerful alliance that is the SCO, together with the loss of Pakistan and India into that sphere of influence. It goes further: even Turkey, a long-standing NATO member, plans to defect to the SCO, apparently a personal project of Recep Erdoğan, the recently re-elected Prime Minister.
American-initiated actions against Russia will probably be kept by Russia and the SCO in this big-picture context. It will be treated as an attack against an SCO member, speeding up integration and trade agreements designed to exclude the US dollar as a settlement medium. In this context the SCO members already appear to have agreed on the need to increase gold ownership as an undefined part-solution to replace the US dollar as the currency standard. In other words, the rush to acquire above-ground gold stocks will continue, and China through her refiners is processing and keeping increasing quantities of African-sourced gold as well as her own which would otherwise have gone to the West.
The Russian central bank has been adding to her monetary gold reserves and officially now has more than China (though China is known to have substantial holdings of bullion not currently declared as monetary reserves). All mine output is likely to be absorbed by the State. Russia has continued to build her gold reserves at a time when it could be argued by western analysts that she needs to hold on to all her foreign currency, given the prospect of escalating sanctions. The truth is that…
by
Adam Taggart
by
Alasdair Macleod
Executive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
The Very Real Danger of a Failure in the Gold Market
PREVIEW by Alasdair MacleodExecutive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
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