Russell Napier: “Trade War Is The Beginning Of A New Global Monetary System”

A Country Matures, An Exchange Rate Declines

After two weeks on the road visiting clients your analyst returns with a better view of the consensus outlook. There is, though, much in the consensus to disagree with. In particular it seems peculiar that the consensus believes the democratically elected government of Italy, with policies entirely contrary to EU membership, will be put through the bureaucratic meat grinder in Rome and Brussels and turned into EU sausage, in a similar process that minced the political representatives of Greece.

While this might well be the case, it is hard to understand that the grinding destruction of this democracy, even if it is only moderate compared to the Greek experience, can be anything but bad for growth and asset prices in the EU. Disciplining these politicians to abandon their manifesto promises and follow the ways of the EU is highly unlikely to be a painless experience, either for Italy or the rest of the EU. Nonetheless, investors are content to believe that a painless disciplining of Italy’s elected representatives is all but inevitable. We shall see.

Perhaps the most prevailing consensus view is that the recent weakness of the RMB represents a Chinese counter-punch in the trade war with the US. Coming when it does, it is easy to see the accelerated decline of the RMB as a tactical and not a strategic move. Comments by the PBOC on July 3rd have probably reassured many investors that the managed exchange rate regime is not at risk and that the RMB will continue to be managed against a basket of currencies. Your analyst does not agree. Continue reading

The Origin of Contagions lies in the Common Reserve Currency

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The question of money supply and inflation has been erroneously been set in stone predominantly by the debasement of Spain and Britain during the period of Henry VIII. This was really a period where there were various countries and their currency completely relied on the exchange market in Amsterdam, which was based entirely upon their metal content. This period was far less judgmental insofar as we have today where currencies rise and fall purely on anticipation of political events. During the middle ages, this influence of anticipating future value based upon possible political decisions was not readily dominant and the coins of one nation were compared entirely on their metal content.

For example, because of the French at war with Britain, they created a wave of inflation that spread like a contagion to other nations, namely Spain and Italy, because money was commodity based using gold and silver. In this way, there was really a single currency base among nations and the problems of one would be exported to all others by their debasement. Continue reading

China Has Quietly Implemented A 6% Across The Board ‘Tariff’ On All US Imports

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Nothing happens by accident in China and this massive drop in the value of the Yuan mirrors the violent devaluation, snap in 2015…

 

Trump and Xi have spent much of the last few weeks tossing tariff grenades across the Pacific Ocean as retaliatory retaliations grow ever stronger in rhetoric and potential escalations.

Then this week, Trump seemed to back away from his most serious threats (direct Chinese investment restrictions).

We wonder if this is why… Continue reading

Russia And India Ditch Dollar In Military Deals

With the US increasingly willing to use the dollar, and SWIFT, as a strategic weapon against the country’s sovereign enemies (as Iran learned every 5 or so years), Russia and India are preparing to bypass US sanctions on Moscow by using the rupee and the ruble in bilateral trade involving military deals, the Economic Times reported.

Some $2 billion in weapons deals between India and Russia have been hit as a result of the recent US sanctions, as payments get stuck. The countries are seeking to bypass such monetary bottlenecks this by switching to settlements in domestic currencies and ditching the greenback. Continue reading

Obama-era license aimed to let Iran convert money in dollars

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FILE – In this April 16, 2018, file photo, Sen. Rob Portman, R-Ohio, speaks during a news conference in Cincinnati. The Obama administration secretly sought to give Iran brief access to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so. That’s according to an investigation by Senate Republicans released June 6. “The Obama Administration misled the American people and Congress because they were desperate to get a deal with Iran,” said Portman, the subcommittee’s chairman. (AP Photo/John Minchillo, file)

 

WASHINGTON (AP) — The Obama administration secretly sought to give Iran access — albeit briefly — to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so.

An investigation by Senate Republicans released Wednesday sheds light on the delicate balance the Obama administration sought to strike after the deal, as it worked to ensure Iran received its promised benefits without playing into the hands of the deal’s opponents. Amid a tense political climate, Iran hawks in the U.S., Israel and elsewhere argued that the United States was giving far too much to Tehran and that the windfall would be used to fund extremism and other troubling Iranian activity.

The report by the Senate Permanent Subcommittee on Investigations revealed that under President Barack Obama, the Treasury Department issued a license in February 2016, never previously disclosed, that would have allowed Iran to convert $5.7 billion it held at a bank in Oman from Omani rials into euros by exchanging them first into U.S. dollars. If the Omani bank had allowed the exchange without such a license, it would have violated sanctions that bar Iran from transactions that touch the U.S. financial system. Continue reading

Iran: The Hollowing-Out of the Regime

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Pictured: The Iranian city of Mashhad, enveloped in a haze of air pollution. Of the 500 most polluted cities of the world, Iran with 19 cities comes fifth. (Image source: Tasnim/Wikimedia Commons)

 

  • Iran: The Hollowing-Out of the Regime The analogies with the former East Germany suggest that Iran, too, is ripe for regime change. They also suggest that a change may come in weeks, months or years, depending on chance events and particularly on whether the local authorities and their security forces, at least in some areas, get tired of killing people.
  • What is likely to push such developments forward? The answer is that the new American policy, whether by chance or intent, may be as good as anything.

On December 28, 2017, major protests against the Iranian regime broke out in Mashhad and quickly spread to numerous other urban centers. Mostly merely noisy at first, some turned violent and eventually the Islamic Revolutionary Guards Corps (IRGC) suppressed the phenomenon, killing some and arresting thousands of others. Protests have continued, but news about them is scanty. How are they to be evaluated?

There are interesting parallels with the twilight of the East German regime. By a coincidence, the Iranian regime is in its fortieth year and the East German regime suddenly collapsed just after its leaders had held a large-scale pompous celebration of its fortieth anniversary in the capital, East Berlin. Continue reading

“Interfere!”

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ROME/BERLIN (Own report) – Following massive pressure from Berlin, Italy’s new government has renounced on appointing a well-known euroskeptic to become economy and finance minister. The renowned economist Paolo Savona must accept a less prominent post as Minister for European Affairs – above all because he criticizes Germany’s blatant policy of domination at the expense of the other euro zone countries. The far right Lega Nord is now almost as strongly represented in Rome’s government as the 5-Star Movement: Due to Germany’s open interference, Lega’s poll ratings have soared, thereby significantly increasing its political clout. In the run-up, German politicians and media had reactivated a tactic they had been using since the beginning of the euro crisis: With warnings of harsh financial market reactions, they fuel the fear of a crisis, thus applying even more pressure on Rome. According to German media with wide circulation, Italy’s policy “concerns all of us” – “Interfere!”

Continue reading

Deutsche Bank Formally Classified as a Problem Bank

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Deutsche Bank is now been classified as a problem bank by FDIC and has been included in a list of banks to be watched. This is the biggest bank in Europe. It cannot be merged within Germany with Commerce Bank for there is just not enough equity to overcome the derivative losses. The only other candidate is BNP, but that is a French bank. This is where the fairytale of Euroland ends. They wanted to create a single currency, but they were unwilling to actually merge the economies. This is why our sources in Italy argue they are now an occupied country. Continue reading

Russia Finance Minister: We Are Ready To Ditch The Dollar In Favor Of The Euro

In a testament to the success of the latest Trump sanctions against Russia, overnight Russian aluminum giant Rusal announced that its chief executive, Aleksandra Buriko, and half of its managerial board resigned to make sure the firm avoids U.S. sanctions against its founder, billionaire oligarch, Oleg Deripaska. The mass resignations were part of “the efforts that have been made by the management of the group to protect the interests of the company and its shareholders” since the sanctions were imposed last month, Rusal said in a May 24 statement.

Continue reading

A Central Banker’s Plan for Your Money

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Jim Rickards calls them “silent dog whistles.”

Through these signals, in the frequencies beyond normal human hearing… elites communicate with each other.

Their communications are public.

But their language can be so thick, so technical — so innocuous — not one in a hundred can crack it open.

Only the intended audience can penetrate the deeper message within… and that audience is their fellow elites. Continue reading

EU Could Switch To Euros In Oil Trade With Iran

Oil tanker

 

The European Union (EU) is considering switching to euros instead of U.S. dollars in the oil trade with Iran, Sputnik reported on Wednesday, quoting a diplomatic source.

Iran, for its part, said as early as in mid-April that it would be switching to euros from U.S. dollars in reporting foreign currency amounts, to reduce the reliance on the dollar as it was expected that President Trump would not waive the sanctions this time around.

The EU vowed on Tuesday to seek ways to work and trade with Iran. Continue reading

Another Step Towards Collapse of Petrodollar

Note: Please see the source for currency swap agreements chart.

 

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For the past year and half a major topic throughout the alternative press has been the new Chinese oil futures contract settled/priced in yuan. The fact that China is directly challenging the Federal Reserve Note, U.S. dollar, is quiet a significant change. For those that have been paying attention this new futures oil contract is nothing more than the next step in China moving completely away from the Federal Reserve Note, and the “world reserve currency” system and towards a multi-polar world with several currencies being used for international trade. Continue reading

Gold Leaving US Vaults: Signs of Upcoming Currency War and Armed Conflict

Gold Leaving US Vaults: Signs of Upcoming Currency War and Armed Conflict

 

The Turkish government has made the decision to repatriate all of its gold reserves that are currently housed in the US Federal Reserve System (FRS). Overall Turkey was storing 220 tonnes, valued at $25.3 billion, in the US, which it repossessed on April 19, 2018.

Turkey’s President Recep Tayyip Erdogan has toughened his stance against the US dollar (USD), declaring that international loans should be made in gold instead of the American currency. Ankara is seeking to reduce dependence on the US financial system. The gold’s homecoming was partly prompted by the US threats to impose sanctions if Turkey goes through with the signed deal to purchase Russian S-400 missile defense systems. Continue reading

Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves

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Russia buys 300,000 ounces of gold in March and nears 2,000t in gold reserves
– Russia now holds just over 1,861 tonnes, more than officially reported by China at 1,842t
Both Russia and China have the power to destabilise US dollar by dumping dollar-denominated assets
– Turkey has removed all gold held in the U.S. opting for Bank of England and BIS
– Turkey follows trend set by both Germany, Netherlands and others to remove gold reserves stored in the United States
– Central bank decisions regarding gold reserves are examples of countries becoming nervous about the outlook for the dollar under the Trump administration

Russia bought another 300,000 troy ounces of gold in March bringing Russia’s total gold reserves to 1,861 tonnes or 60.8 million troy ounces as of the start of April, the central bank announced loudly at the weekend.

The continuing robust and steady accumulation of gold reserves continues and it was notable how Russian media channels loudly (more loudly than usual it seemed with many outlets covering) pronounced the continuing diversification into gold bullion by the Russian central bank. It suggests that gold is being used as a bulwark to protect Russia from the stealth financial, trade and currency wars which appear to be deepening. Continue reading

Turkey Will Repatriate All Gold From The US In Attempt To Ditch The Dollar

 

After VenezuelaGermanyAustria and the Netherlands prudently repatriated a substantial portion (if not all) of their physical gold held at the NY Fed or other western central banks in recent years, this morning Turkey also announced that it has decided to repatriate all its gold stored in the US Federal Reserve and deliver it to the Istanbul Stock Exchange, according to reports in Turkey’s Yeni Safak. It won’t be the first time Turkey has asked the NY Fed to ship the country’s gold back: in recent years, Turkey repatriated 220 tons of gold from abroad, of which 28.7 tons was brought back from the US last year.

According to the latest IMF data, Turkey’s gold reserves are estimated at 591 tons, worth just over $23 billion. This makes Ankara the 11th largest gold holder, behind the Netherlands and ahead of India. Continue reading

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