I've chewed on this and it seems like this could be a propaganda to help finish off the fiat currencies of the world. There is need to collapse the system to stop what has been allowed to go on for so long. It is similar to folks speaking to this Quantum Financial System (QRFS) or even loading up on gold now. These solutions work sure, and there is discussion that this will be a world wide thing. In our western society it will just be another system that eventually corrupts. People who have lots of money today, can buy lots of gold tomorrow. It does not solve the debt problem, or the horrible mismanagement of economies.
Let's also not forget that -every- country did some form or the other of mandates and coercion to get vaccinated. Suddenly we are to trust these people to handle a new money system after what they did with the last one?
Not saying it's not going to happen, just does not solve the problems we face as a society.
Of course it "will be another system that eventually corrupts" Is there any other sort? ;)
The powers that shouldn't be have raped upwards of 97% of the value of the dollar now it's time to move to the new system and start all over again because there's nothing left. They got it all in this 'game' now it's onto the next.
I hope every thinking person has already made their food, water and other supplies purchases because the path to a new monetary system is never smooth. Good luck to you all in the coming shenanigans while they switch over the financial system.
Yes gold and oil backed currencies and other natural resources backed currencies in other countries without oil. This is transformative for the developing nations, many have resources but weak currencies under the PetroDollar system...
I've been buying gold and silver coins. It's frightening to think your dollars could end up as worthless as toilet tissue. In the big picture, this is all part of the Great Reset/New World Order agenda of depopulation via the clot shots and financial collapse. Some claim Putin is fighting the NWO and some claim he's abetting it. I have no idea who's right but I hope it's the former.
"By offering to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, the Bank of Russia has both linked the ruble to gold and, since gold trades in US dollars, set a floor price for the ruble in terms of the US dollar."
Wrong! Ronan, by screwing this up, inverts his arguments through the rest of the piece.
The offer is only to BUY gold with rubles. This puts a max price on the ruble (denominated in gold) or if you prefer a minimum price on gold (denominated in rubles). A one sided bookend does not a peg make. ergo...if the price of rubles falls or the price of gold increases so that no one will offer a gram of gold for 5,000 rubles, then no trades occur...how would this then put a floor on the ruble? It doesn't!
What they are really doing is offering European buyers an alternate method to purchase Russian commodities in rubles; if they can't access rubles, they can instead send physical gold to make payment at a rate of 5,000 rubles per gram. .
while you make valid points, the issue here is IF there is an overt announcement or the optics are even more obvious in terms of gold to ruble or yuan or what have you, then the price of gold will trend higher in USD terms for variety of reasons.
In the short term perhaps higher, perhaps lower. I say this because gold pricing is largely determined in the derivative markets (e.g. XAU/USD) where the trading volume is more than 2-3 orders of magnitude higher than physical trading. It is why when there are world events that stress financial funding lines (like the last 2-3 weeks), which would otherwise suggest gold should go up as a safe haven it instead goes down as LBMA members naked sell XAU to procure USD to solve short term liquidity shortfalls.
Russia's physical gold buy offer, if exercised and sustained, is certainly a shot across the bow for the LBMA. But if/when the LBMA defaults, and declares all open claims on gold will be settled in USD by a fixed date, with almost 100% certainty the quoted gold price will drop precipitously. Only when the dust settles and physical gold price discovery emerge will the true price be known. I hold physical gold for this eventuality, and look forward to the price drop as a sign of stress in the LBMA system.
back to a "ruble floor": From official sources there has not been even a hint that the RCB will sell gold to defend the ruble price which would imply a form of peg or gold backing. Absent this it looks more like a way to allow Russian gas/oil customers an alternate way to pay for gas/oil while simultaneously sticking a finger in the eye of the LBMA/IMF system. IMO
Bullion banks operate with banking rules for bullion. Just like banks loan money into existence, it means (by definition) bullion banks loan paper gold into existence. They are legally short gold (selling gold they don't own) by the very nature of running double entry accounting ledgers denominated in bullion. But whereas USD banking has a lender of last resort (the Fed), there is no longer a lender of last resort for bullion banks.
This sets up a thought experiment. If the LBMA is going to fail, will they allow the price to run high and get financially hammered and some go bankrupt? Or will they aid the price in crashing and settle out their short positions at a big profit? As sure as the sun rises in the east, if they can they will do the later. It would be easy:
"Due to sanctions which prevent access to gold supplies from Russian refiners we declare Force Majeure; we will can no longer settle claims in bullion. We will cease bullion operations on 31 May and settle all open positions at that day's closing price."
Given that a paper claim for gold, that explicitly can't be exchanged for gold, is akin to the value of a circus ticket when the circus has left town (zero). they then just lean on the price and sell paper gold all the way down till 31 May and then close out their shorts with USD at a massive profit. Perfectly legal.
The only limit to how far they push it is the calculus of the present value of the profit vs the prospects of future lawsuit expenses and small probability of incremental penalties many years later.
Only when the LBMA system is dead and there is a physical only gold market will we get true price discovery and learn the value of gold.
Thank you for the information, handyman. Even if the 2nd Smartest Guy already knows the above, I did not, and learned some things in the process of reading your comments.
All your comments have been enlightening, thank you very much.
There's a 'special place in hell' for those that invented 'paper gold'
It just is a fact of history at this point...the LBMA system was created with a reasonable intent. It was supported by the Fed, BOE, and European central banks to keep the wheels on the bus of the IMF USD world reserve system till the Euro could be stood up.
When the Euro stood up, providing another currency system of similar weight to the USD, the LBMA should have been wound down tapering the USD role as THE world reserve. The world would have been better off. Instead powerful interests maneuvered to keep it going for their benefit, despite the growth in externalities (financial bubbles, fragile system, world manufacturing imbalances, massive malinvestment). Now the transition off the system will likely be by things breaking rather than a taper...
Same as Pixie above, I've learned something and thank you for that :)
I do have a question though and it goes to your assertion that: "only when the dust settles and physical gold price discovery emerge will the true price be known. I hold physical gold for this eventuality, and look forward to the price drop as a sign of stress in the LBMA system." - weren't there times in history when holding physical gold was deemed illegal (even in the 20th century)? Can you give some pointers on how to navigate the landscape if that sort of fuckery happens again?
Most of my thoughts are heavily informed by Another, FOA, and FOFOA. A guess:
The 1933 ban was enacted to help control the dollar peg to gold under a gold standard. I don't think nations would or can go back to a gold standard in this modern era.
Under a gold standard when there is more demand for gold than the currency the peg breaks unless the central bank accepts currency and issue gold, thereby decreasing supply of currency and increasing the gold supply. So to be on a gold standard is synonymous with the central bank supporting convertibility. I point this out because on forums people often talk about a gold standard or gold peg but they don't seem to be aware this requires a central bank to manage that peg by buying and selling gold and currency.
What would happen if, say, Russia pegged to gold. The US could print dollars, exchange them for Rubles in the Fx market and then send the Rubles to the CBR and request gold. If they maintain their gold standard they would take in rubles and send gold. The result is that the ruble would strengthen compare to the dollar, their positive trade balance would erode, ruble denominated debts would get harder to pay, and their gold reserves would decay. Countries don't wants any of these things, they want to competitively devalue, have the options to print, and make debts easier to pay.
This is all just to say that the prior conditions that incentivized an ownership ban (as part of controlling a gold standard) have near zero chance of reoccurring. We may see lots of schemes to defraud people, thefts, and perhaps temporarily a huge windfall tax rate. One should be prepared to hold physical for the duration and in the words of FOFOA, to "lay low" and be quiet until all the fuckery dissipates.
last paragraph made more evident by Russian Central Bank's 7 April clarification that their offer is to purchase gold based on market price. It was always just an alternate method for customers to pay for gas/oil...
I've chewed on this and it seems like this could be a propaganda to help finish off the fiat currencies of the world. There is need to collapse the system to stop what has been allowed to go on for so long. It is similar to folks speaking to this Quantum Financial System (QRFS) or even loading up on gold now. These solutions work sure, and there is discussion that this will be a world wide thing. In our western society it will just be another system that eventually corrupts. People who have lots of money today, can buy lots of gold tomorrow. It does not solve the debt problem, or the horrible mismanagement of economies.
Let's also not forget that -every- country did some form or the other of mandates and coercion to get vaccinated. Suddenly we are to trust these people to handle a new money system after what they did with the last one?
Not saying it's not going to happen, just does not solve the problems we face as a society.
Of course it "will be another system that eventually corrupts" Is there any other sort? ;)
The powers that shouldn't be have raped upwards of 97% of the value of the dollar now it's time to move to the new system and start all over again because there's nothing left. They got it all in this 'game' now it's onto the next.
last year i had some savings and i thought about gold, doh!
Do not comply, indeed!
I hope every thinking person has already made their food, water and other supplies purchases because the path to a new monetary system is never smooth. Good luck to you all in the coming shenanigans while they switch over the financial system.
Yes gold and oil backed currencies and other natural resources backed currencies in other countries without oil. This is transformative for the developing nations, many have resources but weak currencies under the PetroDollar system...
I've been buying gold and silver coins. It's frightening to think your dollars could end up as worthless as toilet tissue. In the big picture, this is all part of the Great Reset/New World Order agenda of depopulation via the clot shots and financial collapse. Some claim Putin is fighting the NWO and some claim he's abetting it. I have no idea who's right but I hope it's the former.
"By offering to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, the Bank of Russia has both linked the ruble to gold and, since gold trades in US dollars, set a floor price for the ruble in terms of the US dollar."
Wrong! Ronan, by screwing this up, inverts his arguments through the rest of the piece.
The offer is only to BUY gold with rubles. This puts a max price on the ruble (denominated in gold) or if you prefer a minimum price on gold (denominated in rubles). A one sided bookend does not a peg make. ergo...if the price of rubles falls or the price of gold increases so that no one will offer a gram of gold for 5,000 rubles, then no trades occur...how would this then put a floor on the ruble? It doesn't!
What they are really doing is offering European buyers an alternate method to purchase Russian commodities in rubles; if they can't access rubles, they can instead send physical gold to make payment at a rate of 5,000 rubles per gram. .
while you make valid points, the issue here is IF there is an overt announcement or the optics are even more obvious in terms of gold to ruble or yuan or what have you, then the price of gold will trend higher in USD terms for variety of reasons.
In the short term perhaps higher, perhaps lower. I say this because gold pricing is largely determined in the derivative markets (e.g. XAU/USD) where the trading volume is more than 2-3 orders of magnitude higher than physical trading. It is why when there are world events that stress financial funding lines (like the last 2-3 weeks), which would otherwise suggest gold should go up as a safe haven it instead goes down as LBMA members naked sell XAU to procure USD to solve short term liquidity shortfalls.
Russia's physical gold buy offer, if exercised and sustained, is certainly a shot across the bow for the LBMA. But if/when the LBMA defaults, and declares all open claims on gold will be settled in USD by a fixed date, with almost 100% certainty the quoted gold price will drop precipitously. Only when the dust settles and physical gold price discovery emerge will the true price be known. I hold physical gold for this eventuality, and look forward to the price drop as a sign of stress in the LBMA system.
back to a "ruble floor": From official sources there has not been even a hint that the RCB will sell gold to defend the ruble price which would imply a form of peg or gold backing. Absent this it looks more like a way to allow Russian gas/oil customers an alternate way to pay for gas/oil while simultaneously sticking a finger in the eye of the LBMA/IMF system. IMO
yes, rehypothecation is a major issue, but imnsho they are going to let it run soon.
Apologies for stating things you may know well...
The LBMA market makers are the big boys: https://www.lbma.org.uk/membership/current-membership#%7B%22filters%22%3A%5B%7B%22property%22%3A%22membershipcategory%22%2C%22label%22%3A%22Market%20Maker%22%7D%5D%7D
Bullion banks operate with banking rules for bullion. Just like banks loan money into existence, it means (by definition) bullion banks loan paper gold into existence. They are legally short gold (selling gold they don't own) by the very nature of running double entry accounting ledgers denominated in bullion. But whereas USD banking has a lender of last resort (the Fed), there is no longer a lender of last resort for bullion banks.
This sets up a thought experiment. If the LBMA is going to fail, will they allow the price to run high and get financially hammered and some go bankrupt? Or will they aid the price in crashing and settle out their short positions at a big profit? As sure as the sun rises in the east, if they can they will do the later. It would be easy:
"Due to sanctions which prevent access to gold supplies from Russian refiners we declare Force Majeure; we will can no longer settle claims in bullion. We will cease bullion operations on 31 May and settle all open positions at that day's closing price."
Given that a paper claim for gold, that explicitly can't be exchanged for gold, is akin to the value of a circus ticket when the circus has left town (zero). they then just lean on the price and sell paper gold all the way down till 31 May and then close out their shorts with USD at a massive profit. Perfectly legal.
The only limit to how far they push it is the calculus of the present value of the profit vs the prospects of future lawsuit expenses and small probability of incremental penalties many years later.
Only when the LBMA system is dead and there is a physical only gold market will we get true price discovery and learn the value of gold.
Thank you for the information, handyman. Even if the 2nd Smartest Guy already knows the above, I did not, and learned some things in the process of reading your comments.
All your comments have been enlightening, thank you very much.
There's a 'special place in hell' for those that invented 'paper gold'
You're welcome.
It just is a fact of history at this point...the LBMA system was created with a reasonable intent. It was supported by the Fed, BOE, and European central banks to keep the wheels on the bus of the IMF USD world reserve system till the Euro could be stood up.
When the Euro stood up, providing another currency system of similar weight to the USD, the LBMA should have been wound down tapering the USD role as THE world reserve. The world would have been better off. Instead powerful interests maneuvered to keep it going for their benefit, despite the growth in externalities (financial bubbles, fragile system, world manufacturing imbalances, massive malinvestment). Now the transition off the system will likely be by things breaking rather than a taper...
Same as Pixie above, I've learned something and thank you for that :)
I do have a question though and it goes to your assertion that: "only when the dust settles and physical gold price discovery emerge will the true price be known. I hold physical gold for this eventuality, and look forward to the price drop as a sign of stress in the LBMA system." - weren't there times in history when holding physical gold was deemed illegal (even in the 20th century)? Can you give some pointers on how to navigate the landscape if that sort of fuckery happens again?
There sure is a lot of fuckery afoot.
Most of my thoughts are heavily informed by Another, FOA, and FOFOA. A guess:
The 1933 ban was enacted to help control the dollar peg to gold under a gold standard. I don't think nations would or can go back to a gold standard in this modern era.
Under a gold standard when there is more demand for gold than the currency the peg breaks unless the central bank accepts currency and issue gold, thereby decreasing supply of currency and increasing the gold supply. So to be on a gold standard is synonymous with the central bank supporting convertibility. I point this out because on forums people often talk about a gold standard or gold peg but they don't seem to be aware this requires a central bank to manage that peg by buying and selling gold and currency.
What would happen if, say, Russia pegged to gold. The US could print dollars, exchange them for Rubles in the Fx market and then send the Rubles to the CBR and request gold. If they maintain their gold standard they would take in rubles and send gold. The result is that the ruble would strengthen compare to the dollar, their positive trade balance would erode, ruble denominated debts would get harder to pay, and their gold reserves would decay. Countries don't wants any of these things, they want to competitively devalue, have the options to print, and make debts easier to pay.
This is all just to say that the prior conditions that incentivized an ownership ban (as part of controlling a gold standard) have near zero chance of reoccurring. We may see lots of schemes to defraud people, thefts, and perhaps temporarily a huge windfall tax rate. One should be prepared to hold physical for the duration and in the words of FOFOA, to "lay low" and be quiet until all the fuckery dissipates.
If you haven't read FOFOA I'd recommend it, his old (free) blog is http://fofoa.blogspot.com/
last paragraph made more evident by Russian Central Bank's 7 April clarification that their offer is to purchase gold based on market price. It was always just an alternate method for customers to pay for gas/oil...