Russia’s and China’s secret weapon to take down US economic dominance http://russiafeed.com/russias-chinas-secret-weapon-take-us-economic-dominance/ (New Eastern Outlook) – The Russian government has recently announced it will issue nearly $1 billion equivalent in state bonds, but denominated not in US dollars as is mostly the case. Rather it will be the first sale of Russian bonds in China’s yuan. While $1 billion may not sound like much when compared with the Peoples’ Bank of China total holdings of US Government debt of more than $1 trillion or to the US Federal debt today of over $20 trillion, it’s significance lies beyond the nominal amount. It’s a test run by both governments of the potential for state financing of infrastructure and other projects independent of dollar risk from such events as US Treasury financial sanctions. Russian Debt and China Yuan Since the August 1998 sovereign default triggered by the West, Russian state finances have been prudent to almost a fault. The size of the national government debt is the lowest of any major industrial country, a mere 10.6% of GDP for the current year. This has enabled Russia to withstand the US financial warfare sanctions imposed since 2014, and forced the country to turn elsewhere for their financial stability. That “elsewhere” is increasingly called the Peoples’ Republic of China. Now the Russian Ministry of Finance is reportedly planning the first sale of Russian debt in the form of bonds denominated in Chinese yuan currency. The size of the first offering, a testing of the market, will be 6 billion yuan or just under $1 billion. The sale is being organized by the state-owned Russian Gazprombank, the Bank of China Ltd., and China’s largest state bank, Industrial & Commercial Bank of China. The move is being accelerated by reports that the US Treasury is examining potential consequences of extending penalties, until now concentrated on Russian oil and gas projects, to include Russian sovereign debt in its sanctions warfare. The new yuan bond will be traded on the Moscow Exchange and will aim to sell to mainland Chinese investors as well as international and Russian borrowers at attractive interest rates. Western sanctions or threats of sanctions are forcing Russia and China to cooperate more strategically on what is becoming the seed of a genuine alternative to the dollar system. The Russian yuan debt offerings will also give a significant boost to China’s desire to build the yuan as an accepted international currency. China Petro-Yuan The steps to begin issuing Russian state debt in yuan are paralleled by another major development towards broader international yuan acceptance vis a vis the US dollar. On December 13, Chinese regulators completed final testing in preparation for launch of not a dollar-backed, but rather, a yuan-backed oil futures contract to be traded on the Shanghai Futures Exchange. The implications are potentially large. China is the world’s largest oil importing country. Control of financial oil futures markets until now has been the tightly-guarded province of Wall Street banks and the New York, London and other futures exchanges they control. Emergence of Shanghai as a major yuan-based oil futures center could significantly weaken dollar domination of oil trade. Since the 1970’s oil shock and the 400% rise in the oil price from OPEC countries, Washington has maintained a strict regime in which the world’s most valuable commodity, oil, would be traded in US dollars alone. In December 1974, the US Treasury signed a secret agreement in Riyadh with the Saudi Arabian Monetary Agency, “to establish a new relationship through the Federal Reserve Bank of New York with the US Treasury borrowing operation” to buy US government debt with surplus petrodollars. The Saudis agreed to enforce OPEC dollar-only oil sales in return for US sales of advanced military equipment (purchased for dollars of course) and a guarantee of protection from possible Israeli attack. This was the beginning of what then-US Secretary of State Henry Kissinger called recycling the petro-dollar. To the present, only two oil export country leaders, Iraq’s Saddam Hussein and Libya’s Qaddafi, have tried to change the system and sell oil for euros or gold dinars. Now China is challenging the petro-dollar system in a different way with the petro-yuan. The difference between Saddam Hussein or Qaddafi is that far more influential countries, Russia and now Iran, with China’s implicit support, are cooperating to avoid the dollar out of necessity forced by US pressure. That is a far stronger challenge to the US dollar than Iraq or Libya could ever manage. The China yuan oil futures contract now will allow China’s trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars. Oil exporters such as Russia or Iran or Venezuela—all targets of US sanctions—can avoid those US sanctions by avoiding oil trades in dollars now. This past September Venezuela responded to US sanctions by ordering the state oil company and traders to make oil sale contracts into euro and not to pay or be paid in US dollars any longer. Gold for oil? The Shanghai International Energy Exchange will soon launch their crude-oil futures contract denominated in yuan. The Shanghai International Energy Exchange futures contract will streamline and solidify the process of selling oil to China for yuan that Russia began after sanctions in 2014. This will also allow other oil producers around the world to sell their oil for yuan instead of dollars. The crude oil futures contract will be the first commodity contract in China open to foreign investment funds, trading houses, and oil firms. The circumvention of US dollar trade could allow oil exporters such as Russia and Iran, for example, to bypass US sanctions. To make the offer more attractive, China has linked the crude-oil futures contract with the option to efficiently convert yuan into physical gold through gold exchanges in Shanghai and Hong Kong. According to Wang Zhimin, director of the Center for Globalization and Modernization at China’s Institute of Foreign Economy and Trade, the possibility of converting the yuan oil futures into gold will give the Chinese futures a competitive advantage over Brent and West Texas Intermediate benchmarks. Now Russia or Iran or other oil producers are in a position to sell oil to China for yuan or rubles, bypassing the dollar entirely. The shift is about to take place in the coming weeks as the yuan oil futures contract is officially launched. Further in October China and Russia launched what is called a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions that will reduce settlement risk for oil and other trades. Already reportedly Russian oil and gas sales to China are being conducted in Ruble and Yuan and since the foolish US effort to isolate Qatar in the Persian Gulf, Qatar, a major LNG gas supplier to China has switched to pricing in yuan. Pressure is growing that at some point Saudi Arabia breaks its 1974 pact with Washington and sells its oil to China also for yuan. Iran to Join EEU A new element is about to be added to the growing cooperation across Eurasia centered around China and Russia, namely Iran. According to Behrouz Hassanolfat of Iran’s Trade Promotion Organization, in a statement carried on Iranian state-owned Press-TV, as early as February, 2018 Iran is set to become a member of Russia’s Eurasian Economic Union (EEU). Presently the EEU, created in 2015, includes Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan to create a large zone for free transit of goods, services, capital and workers among member states. Presently the EEU is a market of 183 million people. Addition of Iran with its more than 80 million citizens would give a major boost to the economies of the EEU and to its economic importance, creating a common market of more than 263 million, with skilled labor, engineers, scientists and industrial know-how. Iran has already announced, in face of escalating threats from Washington, that it seeks ways to sell its oil for non-dollar currencies. Integration into the EEU could bring a solution to this as Iran, Russia and China inevitably draw closer in face of relentless US pressures on all three. Increasingly in proportion to the pressure from the West the nations of Eurasia are developing modes of growing their economies independent of US Treasury financial sanctions. In retrospect, it’s likely that those US sanctions will be seen as one of the more stupid attempts of Washington to dominate the economies of Eurasia.
The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine "Russia and China ... have concluded that pumping the US military budget by buying US bonds ... is an unsustainable proposition ..." http://russia-insider.com/en/petro-...curity-doctrine/ri22044#.Wj6UTpPA2aE.facebook The new 55-page “America First” National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals,” and for all practical purposes strategic competitors of the United States. The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries.” Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world.” Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.” Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geo-economic process of Eurasia integration. The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies,” and stressed the need to “overcome the excessive domination of a limited number of reserve currencies.” That was a clear reference to the US dollar, which accounts for nearly two-thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials. And that brings us to the unnamed secret at the heart of the NSS; the Russia-China “threat” to the US dollar. The CIPS/SWIFT face-off The website of the China Foreign Exchange Trade System (CFETS) recently announcedthe establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future. Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar. The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit. What matters, in this case, is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event that Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism. Last March, Russia's central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long-term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system. Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS countries are bound to focus on trading physical gold. Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices. The ultimate politically charged dossier Intractable questions referring to the US dollar as the top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it. The current state of play is still all about the petrodollar system; since last year, what used to be a key, “secret” informal deal between the US and the House of Saud, is firmly in the public domain. Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism, Washington has accumulated an astonishing $20 trillion in debt – and counting. Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq’s Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar. But now it’s China who’s entering the fray, following through on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets. The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE) have already run four production environment tests for crude oil futures. Operations were supposed to start at the end of 2017, but even if they start sometime in early 2018, the fundamentals are clear: this triple win (oil/yuan/gold) completely bypasses the US dollar. The era of the petro-yuan is at hand. Of course, there are questions on how Beijing will technically manage to set up a rival mark to Brent and WTI, or whether China’s capital controls will influence it. Beijing has been quite discreet on the triple win; the petro-yuan was not even mentioned in National Development and Reform Commission documents following the 19th CCP Congress last October. What’s certain is that the BRICS countries supported the petro-yuan move at their summit in Xiamen, as diplomats confirmed to Asia Times. Venezuela is also on board. It’s crucial to remember that Russia is number two and Venezuela is number seven among the world’s Top Ten oil producers. Considering the pull of China’s economy, they may soon be joined by other producers. Yao Wei, chief China economist at Societe Generale in Paris, goes straight to the point, remarking how “this contract has the potential to greatly help China’s push for yuan internationalization.” The hidden riches of “belt” and “road” An extensive report by DBS in Singapore hits most of the right notes linking the internationalization of the yuan with the expansion of BRI. In 2018, six major BRI projects will be on overdrive; the Jakarta-Bandung high-speed railway, the China-Laos railway, the Addis Ababa-Djibouti railway, the Hungary-Serbia railway, the Melaka Gateway project in Malaysia, and the upgrading of Gwadar port in Pakistan. HSBC estimates that BRI as a whole will generate no less than an additional, game-changing $2.5 trillion worth of new trade a year. It’s important to keep in mind that the “belt” in BRI should be seen as a series of corridors connecting Eastern China with oil/gas-rich regions in Central Asia and the Middle East, while the “roads” soon to be plied by high-speed rail traverse regions filled with – what else - un-mined gold. A key determinant of the future of the petro-yuan is what the House of Saud will do about it. Should Crown Prince – and inevitable future king – MBS opt to follow Russia’s lead, to dub it as a paradigm shift would be the understatement of the century. Yuan-denominated gold contracts will be traded not only in Shanghai and Hong Kong but also in Dubai. Saudi Arabia is also considering to issue so-called Panda bonds, after the Emirate of Sharjah is set to take the lead in the Middle East for Chinese interbank bonds. ...
Though gold is obviously going to figure in the RESET, silver should get a prominent role as it is the scarcer of the two _JOHNLGALT.
That is the result of the GGL search I did. The LINK is there - but is not an active usable link because it is in a jpeg. cheers.
This particular FLOW of Post's is making my head spin and is convincing that Silver and Gold need be stacked , If one has opportunity saving any metal will cause no harm . Any way I need do research to offer some real input Except America is Owned by Debt & embracing isolationism . Is bankruptcy looming for America . China converting money transactions in Gold ( Real Money)
The latest from King World News on the RESET. kingworldnews.com/alert-greyerz-the-global-reset-will-come-like-a-thief-in-the-night
The latest from KWN on the RESET again. kingworldnews.com/alert-greyerz-the-global-reset-will-come-like-a-thief-in-the-night
Even if USA or China go bankrupt... what does that mean to you or anyone else in Australia. A recession, maybe a depression than back to normal. A recession nor depression doesn't means Mad Max thunder dome becoming reality. USSR collapsed economically, no one blinked an eyelid and life went on... If China collapsed, life would suck for a while for those that lost their job, but 30 years china was minuscule in the world stage, 120 years a go the same could be said of USA. I can see gold and silver doubling or tripling if China or USA went into depression.... but at that stage hopefully I can dump the lot for FIAT for money.
Even if USA or China go bankrupt... what does that mean to you or anyone else in Australia. A recession, maybe a depression than back to normal. A recession nor depression doesn't means Mad Max thunder dome becoming reality. USSR collapsed economically, no one blinked an eyelid and life went on... If China collapsed, life would suck for a while for those that lost their job, but 30 years china was minuscule in the world stage, 120 years a go the same could be said of USA. I can see gold and silver doubling or tripling if China or USA went into depression.... but at that stage hopefully I can dump the lot for FIAT for money. I hope you don't take this personally Ivp6Ready, you said: "A recession nor depression doesn't means Mad Max thunder dome becoming reality. " You said: A recession, maybe a depression than back to normal. Maybe you meant "A recession, maybe a depression then back to normal." You must be American, are you? "USSR collapsed economically, no one blinked an eyelid and life went on... If China collapsed, life would suck for a while for those that lost their job, but 30 years china was minuscule in the world stage, 120 years a go the same could be said of USA." Way back then America was not the World Reserve Currency, please study history. Everything is now interlocked with Gold/silver/ USD/ All currencies, etc. ONE DOWN-ALLDOWN. As I said, - nothing personal.
gold and silver in a burn up war arena would still be around so after the currencies wars, these gold and silver just need to be dig out again when all are down, but not all are out, just dig them out again...long live gold and silver... Australia will survive because off all the natural resources and not too many people around in the worst of depression there were still 70% of people with works
"Australia will survive because off all the natural resources and not too many people around in the worst of depression there were still 70% of people with works " Hope you are right alor.
Way back when? In the 70's when their economy was stagnating but didnt collapse or 1991 when the USSR actually did collapse? Seeing US Dollar has been a world reserve currency for over 70 years you would be wrong (yet again) on both counts. Please study history.
way back, the Peace Dollar is 90% silver and Gold Eagle $20 gold & silver were the reserve currencies, until 1971 when the gold window got "temporarily suspended" we were set in the petrol dollars, Saudi oil were exported to the US, in return... LT securities were reinvested... until recently the non petrol dollars are as good to buy oil, US treasuries find it hard to attract more and more buyers history was written by the victors
