Russia Just Pulled Itself Out Of The Petrodollar

Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote “How The Petrodollar Quietly Died, And Nobody Noticed“, because for the first time in almost two decades, energy-exporting countries would pull their “petrodollars” out of world markets in 2015.

We added that in 2014 “the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations.”

The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids. Continue reading

Russia Strikes Back Against the West, Purchases 900,000 Ounces of Gold

President Putin admitted that the economic sanctions Western officials have imposed on Russia are taking a toll on Russian businesses. This has been most notable in the Russian stock market as money continues to be pulled from the system.

President Putin has also made the point that any economic sanctions imposed on Russia would have a boomerang effect, which will do more harm than good to those imposing the sanctions. This is a point that I have alluded to in multiple articles recently and wholeheartedly agree with.

The reality is that Europe is heavily dependent on Russia for its energy needs. Specifically, Europe is dependent on Russia’s natural gas. Therefore, Russia and China’s announcement last week on a massive $400 billion natural gas deal came as shock to many, essentially redirecting roughly 20 percent of Europe’s natural gas supply to China. Continue reading

China allows gold imports via Beijing, sources say, amid reserves buying talk

(Reuters) – China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves.

The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.

China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong, which last year supplied $53 billion worth of gold to the mainland.

“We have already started shipping material in directly to Beijing,” said an industry source, who did not want to be named because he was not authorised to speak to the media. The quantities brought in so far are small, as imports via Beijing have only been allowed since the first quarter of this year, sources said. Continue reading

Russia Could Crush the Petrodollar

Russia threatened to dump its U.S. treasuries if America imposed sanctions regarding Putin’s action in the Crimea.

Zero Hedge argues that Russia has already done so.

But veteran investor Jim Sinclair argues that Russia has a much scarier financial attack which it can use against the U.S. Continue reading

Clouds of crisis return to Europe

Europe’s brief respite from political and financial turmoil has come to an abrupt halt in the wake of a nerve-rattling Italian election, Britain’s loss of its cherished triple-A credit rating and troubling developments on other fronts.

On Monday, the euro fell to its lowest level against the U.S. dollar in six weeks, but strengthened slightly against the British pound, which was shaken by the credit downgrade announced late Friday by Moody’s Investors Service. The Standard & Poor’s 500 index lost more ground in a single session that at any time since November. Italian bonds plunged and German bonds and U.S. Treasuries rallied, as nervous investors once again looked for safer harbours.

Two unlikely political hotheads – loudmouth comedian Beppe Grillo and Silvio Berlusconi, the aging schmoozer who never says die – turned the Italian election on its head, virtually guaranteeing that the country faces a period of political chaos. Continue reading

The World Continues Preparations for the End of the Global Dollar-Based Ecosystem

As the Western world enjoyed their Christmas holidays, news broke in Asia of something that was reported in the media but received very little attention.

History may treat this event as something all together of much larger importance than is currently understood. Future Americans will ask why the U.S government could not see the writing on the wall? That is, tools are being put in place that will end the global dollar-based ecosystem.

Continue reading article: The World Continues Preparations for the End of the Global Dollar-Based Ecosystem (Financial Sense)