Dollar

Terrorism

25/September/2017

Prospects for Gold II

Hugo Salinas Price

In my previous article, "My Views Regarding Prospects for Gold", published on September 21, I addressed the consequences of the Chinese scheme "to be launched formally by the end of the year, by means of which exporters of oil to China will accept the Chinese currency, the Yuan, in payment for oil; for this deal, the Chinese have added an incentive: the Yuan received by the oil exporters will be exchangeable for gold. This gold will be "sourced", i.e. "purchased" outside of China, for the oil exporters." 

This scheme - should China effectively carry through on its intentions - is quite revolutionary and likely to have vast consequences which will affect the whole world. 

For the first time, since August of 1971- 46 years ago - gold will once again form part of commercial international transactions. 

Not only is it a first in 46 years, but the Chinese are linking together both the world's real money, gold, 

AND 

the world's most important commodity, 

OIL, 

which is the fundamental motor of all the world's productive activity. 

By contrast, it is helpful to consider how the US dealt with the oil-gold nexus in 1971. 

By 1970, it was evident to those running the US that it would very soon be necessary to import large quantities of oil from Saudi Arabia. Under the Bretton Woods Agreements of 1945, the immense quantities of Dollars which would shortly flow to Saudi Arabia in payment of their oil would be claims upon US gold, at the time quoted at $35 Dollars an ounce. Those claims would surely deplete the remaining gold held by the US Treasury in short order. It thus became imperative to cut the nexus between gold and the Dollar. Accordingly, on August 15, 1971, the US did just that: the US went "off gold" and continued to pay Dollars for Saudi oil. Kissinger convinced the Saudi that they should deposit their Dollars in the US banking system and hold Dollar Bonds. 

The alternative, to continue under the Bretton Woods monetary system, would have meant that the US would have been forced to raise the price of gold to an enormous figure, in order to reduce the amount of gold payable to the Saudi, to a tolerable level. But raising the Dollar price of gold in that manner, would have constituted a great devaluation of the Dollar and collapsed its international prestige; that in turn, would have ended the predominance of the US as the Number One power in the world. The US was not willing to accept that outcome. So, Nixon "closed the gold window" on August 15, 1971. 

The Chinese measure, which we have outlined above, will go contrary to the American decision of 1971. It is going to raise, and keep raising the price of gold, through its "oil - for Yuan - for gold" scheme, if and when it is launched as programmed later this year.

The establishment of a nexus between, oil, the world's most important commodity and foundation of the world's industrial activity, and gold, which is the world's true money, will overthrow everything which we have taken for granted during the last 46 years. 

China's gold reserves, which serious analysts have calculated at not less than 30,000 tons, plus the gold held by the population (which the Chinese leadership has encouraged it to hold) will increase the wealth and influence of China in the world. 

Once the Yuan has been sufficiently devalued, the Chinese government will be able to make all Yuan currency redeemable in gold, plus all Chinese private and government debt. Russia has sufficient gold reserves to follow suit. 

The Chinese and Russians will then be able to demand gold in payment of their exports and be willing to pay gold for their imports.Thus, the establishment of the all-important nexus between oil and gold is a first step that may lead, in due course of time, to the re-establishment of the gold standard in the world. 

Needless to say, the very big devaluation of the Dollar will place the US in an extremely difficult situation. On this sobering subject, perhaps another outline here, in the future.

DYI:

The U.S. is in a race against time not only for our international prestige but our domestic economy as well.

International

Internationally since abandonment of the last vestige of the gold standard by President Tricky Dick Nixon in 1971 America’s major export has and continues to this day is inflation.  This creates a love/hate relationship enjoying exports to the States but hating inflated dollars or corporate/government bonds.  This in turn requires those countries to dampen internal domestic consumption – lowering their populous living standards – in order to inhibit the dollar’s inflationary impact all at the same time devaluing their currencies to compete with an artificially high dollar.

Hence my title Dollar Terrorism as any oil producing country such as Iraq or Libya who dared move off the dollar reservation was attacked militarily and quickly “snapped back” to trading the almighty buck.  It will be seen if Venezuela trading one half of their oil proceeds in a basket of non dollar currencies will end up with the same fate.  My suspicions instead of military action the U.S. will flood Venezuela with CIA operatives along with their contractor – the 2^nd arm of the CIA – Booz, Allen & Hamilton to foment the toppling of Maduro and once again “snap back” Venezuela to the dollar reservation. 

The big boys – Russia and China – military force is ruled out they are major military players all armed with nuclear weapons.  Using the CIA or their contractors would be a non starter as both countries internal security is tight as a drum only resulting in one arrest and imprisoning after another of our security forces.

So…If Russia and China desires to move to some form of gold standard for oil and gas – IT WILL HAPPEN!

America’s international prestige is tied to the world’s reserve currency the almighty buck when this occurs – and I believe it will – the dollar will take a tumble.  Once this materializes, other countries – oil producing or not – will tie in in some form or another to the gold exchange network further eroding the value of the dollar.  The biggest effect will be the displacement of the dollar and gold will be the new reserve currency.

U.S. Remains a Superpower 

The U.S. will remain a superpower but the days of world domination are numbered whether it is through oil and gas priced in gold or not America is soon to “hit the wall” as has happened to all empires of the past – EMPIRES WILL BANKRUPT A NATION.  Just as Ronald Reagan outspent the Soviet’s with defense spending this simply speeded up the process – the Russian empire [Warsaw Pact] was doomed to collapse (too costly) – oil and gas traded in gold will effect the same change “speeding up” the end of the American empire.

Domestic Economy

China and Russia ending the petrol dollar between these two countries dollars will begin their journey home causing an underlining inflationary rate uncontrollable by the Fed’s unless draconian measures are used.  This will build up steam as more and more countries join the gold rank and file first for oil and gas then trade in general.  When this happens Congress along with the President will no longer run massive budget deficits as this will have the effect of throwing gasoline onto the inflationary fire; jacking up interest rates to compensate lenders depressing our economy between the hammer of inflation and the anvil of increasing interest rates.  To say the least voters – no matter how entrenched a politicians is – will lose his nomination during the primaries to an outraged electorate.

Retirement of World Wide Boomers

Boomers began their forty plus years climbing the mountain the world over for saving/investing creating a massive savings glut driving down interest rates to sub atomic low levels (plus help from central banks) among 1^st and 2^nd world countries.  Upon reaching the summit their savings/investing is throw off the cliff; once retired plummeting to zero AND begin receiving government retirement (Social Security) and health care (Medicare) benefits adding significantly to government outlays.  The dilemma of a guns or butter economy doing both – especially if oil and gas is price in gold – IS OUT OF THE QUESTION!

President Donald Trump is the first president to directly tell all NATO members to pay significant increases in order to preserve this alliance as America will no longer shoulder the majority of costs.  Of course the real translation is America can longer afford this luxury plus containing Russia is no longer a threat. 

  

This consequence of age has begun in Central Europe with the blow up of their abundant social programs all being tapped by their retiring Boomers.  This has just begun here in the States as the leading edge of this massive generation – born 1943 to 1960 (Strauss & Howe) 79 million strong – with the leading edge at the young age of 75 and the tail end babies age 58!  This is why interest rates are slowly drifting upwards – much to the chagrin of our Central bankers – the world wide savings glut is in the process of ending replaced by large scale governmental social outlays.

   

America will be Great Again – A Period of Transition!

Winston Churchill

Americans Will Always Do the Right Thing —

After Exhausting All the Alternatives!

Race against Time!

America is in a race against time.  Ageing Boomers ending the savings glut and hemorrhaging Social Security and Medicare plus the ending – thank God – global empire.  But don’t think for a minute all is lost.  America after exhausting all avenues will land on our feet and remain at least for the next 50 years plus a super power.  As with all transitions there will be bumps in the road, some small others not so much – massive!  Leading edge Boomers have already begun selling off systematically stocks, bonds, and real estate placing downward pressure upon an overvalued market for all three primary assets.  Plus the days of the petrol dollar is coming to a close along with the Bretton Woods Accords (see my previous posts).

Will the U.S. drag down the world into a global recession if not depression?  It is a possibility that I have written about and is a very big probable event.  Be as that may be we have many things going for us.

Internet

This fantastic information high speed freeway of information is destroying one of the three legs of the shadow government – the legacy main stream press.  Despite their once held monopoly the internet is slicing and dicing these wales of disinformation all for the benefit of the shadow government and the deep state as well.  So much so the President of the United States has directly called them out – and rightfully so – FAKE NEWS!

This is directly responsible for the rise in liberty minded citizens who now have a voice equal to those of the main stream press.  This blogger doesn’t have the reach but I’m only one upon tens of thousands creating written or video all along the internet spectrum.  Simply put – main stream legacy press is dying by thousands upon thousands of cuts.  This has the simultaneous effect of neutering the shadow government and deep state by the sterilizing effect of truth beaming directly on them.

As more and more of our citizens awaken pressure will not mount at the Federal level but will be levied – grass roots – within the States.  Such as the States pushing for additional constitutional amendments through article V in order to shrink and decentralize the Fed’s.  A States rights renaissance or rebirth along with cities and counties advocating their rightful place bringing our constitutional republic ever closer to the people.  Don’t think for a second this will occur without a fight!  A slug fest for sure as long as the internet remains relatively free from censorship liberty will prevail.

Energy

• The Unsung hero of energy – energy efficiency – from LED light bulbs to gas sipping autos – the U.S. has reduced its energy foot print significantly.  Businessmen all look to reduce their costs and one place is in energy usage.  Despite any ups or downs of the economy this trend is here to stay will only improve over time. 
• Fracking…Love it or hate it drillers are becoming more and more efficient in its usage extending the life of existing fields along with known shale deposits.  This has driven natural gas prices down to low prices along with moderating the price of oil.
• The development of thorium molten salt nuclear power.  Amazing as it is this is it is an old technology.  The reason it was displaced by the so called standard reactor was not electrical generation but the by products for nuclear bomb making [world domination].  Thorium is unusable for bomb making and as such is shunned by the major powers.  As energy usage has sky rocketed world wide development of thorium power is being ramped up significantly.  Thorium is very plentiful so much so it is not considered a strategic mineral.  Once developed and standardized a new thorium molten salt reactor will be at the same cost as a coal fired plant.  This will moderate significantly the cost of electricity bringing up point four.
• Coal liquefaction…Conversion of coal into liquid fuels technologies that have been around since WWII with many countries such as South Africa using the process for decades.  What is required is energy – such as abundant nuclear power to make the conversion process profitable.

The cross current of technology, energy independence and world domination overreach U.S. foreign policy is in transition from controlling ALL major and minor sea lanes to those who benefit American imports AND exports.  With energy independence manufacturing will have a rebirth turning America into an export nation.  So…America will become disinterested of other countries (unless they have nuclear weapons) outside of our major trading partners.  A new world disorder will occur as America will shun entanglements – out of cost [world domination] and non-necessity of trade – many regions such as the Mid East will fall to the way side.  America will not become isolationist will simply become far more selective in its use of foreign power whether political or militarily. 

DYI