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  • Gold: Russian Presidential Adviser Proposed Plan For Currency War GLD GDX MUX TNR.v 0 comments
    Apr 25, 2014 2:57 PM | about stocks: ABX, TRRXF, MUX, GDX, GG, GLD, SLV, NEM, RGLD, AUY, SLW, FCX, RIO, BHP, TCK, VALE, SSRI, PAAS, NG, KGC, EGO, GDXJ, FXI, CU, BVN, PPP, GORO, ASM, HL, AEM, CDE, IAG, HDB

    (click to enlarge)

    With all the cry about Gold price going lower, Gold is climbing The Wall of Worry and building the Second Bottom of the Double Bottom on daily chart above. This is a normal correction after very impressive run from December Low. We are not the only one watching this chart, so expect the volatility and attempts to paint the breakdown picture here. Otherwise the positive action in Gold today will build up the reversal pattern of Double Bottom on daily chart with the Three White Soldiers - very strong continuation of the Bullish Reversal Pattern. All momentum indicators are positive and confirming this formation.

    The Weekly chart below demonstrates our point in the perspective of last year's Double Bottom reversal in Gold market. Gold is ready to go higher - if it will be allowed now.

    (click to enlarge)

    This Cold War is only getting hotter day by day. We do hope that some wisdom will prevent the full escalation of the war, but the Financial Damage will be mutually assured. From ZeroHedge:

    "According to Vedomosti as Bloomberg reported, Glazyev proposed:

     

    • Russia should withdraw all assets, accounts in dollars, euros from NATO countries to neutral ones
    • Russia should start selling NATO member sovereign bonds before Russia's foreign-currency accounts are frozen
    • Central bank should reduce dollar assets, sell sovereign bonds of countries that support sanctions
    • Russia should limit commercial banks' FX assets to prevent speculation on ruble, capital outflows
    • Central bank should increase money supply so that state cos., banks may refinance foreign loans
    • Russia should use national currencies in trade with customs Union members, other non-dollar, non-euro partners

    In other words, a full-blown scorched earth campaign by Russia."

    Gold Surges As US Dollar Exit Begins: Russia Largest Bank Halts Foreign Currency Loans MUX TNR.v GLD GDX


    "CS. It did not take long for Putin to start its retaliation against the sanctions and excuse was presented by JP Morgan's block of some payments on the grounds that Bank Rossii was involved in transaction. Bank Rossii was on the list of sanctions and even its issued international credit cards were declined after that. Mr Putin said that he will open his personal account in that bank and now it became really personal. We are not judging who is right in all this mess created by CIA vs KGB 2014 War Games, but ultimately aimed to push China from its path of Dangerously Fast Rising Into Power by all means possible including the last asset of the Falling Empire - Military Industrial Complex. We are just observing the outcome.

    For us this action from Russian Largest Bank is the sign of US Dollar Exit flashing Red to everybody who is watching. Any Exit will not be even contemplated without China supporting it - we guess some arrangements are in place already. Putin is looking to reallocated Russian Oil and Gas, Metals and Agricultural Commodities towards Asia: China and India particularly.
    So far China was benefiting from all these Ukraine games by playing "The Smart Monkey Watching Two Tigers' Fight": by abstaining in UN's vote, but treating Michelle Obama during her "family visit" at the highest level at the same time. China is more than happy to buy Copper and Copper projects at the lower price, Chinese are buying the record amount of Gold and now will have the upper hand on pricing in the ongoing long negotiations on Oil and Gas supply to China, which are reported to be concluded in May.

    Next moves will be very interesting to say at least. Western Equity markets are levitating without any reflection of reality of the underlining economy and all it takes now to bring these Currency Wars to the next level is for Putin to announce that All Russian Commodities will be traded Not In US Dollars and any pricing and transactions in US Dollar will be prohibited by Russian Central Bank. Next move could be the pricing and transactions in Gold based currency which is so well explained by James Rickards.

    Russia has already announced the creation of its own payment system not depending on the western financial institutions. White House Hawks are better take notice now as their push to isolate Russia can succeed and Russia can take into "isolation" China, India and other BRICS Club countries with a good half of the world population. Wall Street can survive for a while rigging what is left from the financial markets, but once all Cloud and Mobile Games IPO will be sold to Muppets people will be asking for Food on the streets. As for the "Isolated" - just check your iPhone. Was it Made in China - we guess? The Isolated Club will have all commodities and technology available to prosper. Who will be left behind in the end?"

     

    In Gold We Trust: Forming Of Eurasian Economic Union And Joint Currency Accelerates

    ZeroHedge:

     

    Furious Russia, Downgraded To Just Above Junk By S&P, Proposes "Scorched Earth" Retaliation Against NATO Countries

    Cyprus and Russia - what's the difference (aside from the fact that the former was a money laundering offshore center of the latter until last year of course)?

    If you said one is a lackey to statist, selfish banker interests, and after having its economy thoroughly destroyed by the great doomed European sociopolitical (and pathological) experiment, came crawling back to its Eurozone masters, while the other couldn't care one bit about Pax Petrodollariana and the global central bank cabal, you are right. In which case it will also be clear why a few hours ago that joke of a rating agency, Standard & Poor's, which also earlier announced it was "affirming" France at an AA rating making it very clear it will no longer accept being sued for telling the truth and downgrading sovereigns or otherwise have its offices abroad raided, not only upgraded Cyprus from B- to B (please deposits your funds in Cyprus banks now: they are safe, S&P promises), but - far more importantly - delivered a political message to the Kremlin, and downgraded Russia from BBB to BBB-, one short notch away from junk status. This was the first downgrade of Russia by S&P since December 2008.

    WSJ reports:

    "In our view, the tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects," S&P wrote in its report.

    Moscow's MICEX stock index fell by 1.5% after the move. The ruble weakened 0.6% against the dollar to 35.977.

    A further cut to junk status would be a big move, given Russia's relatively modest level of debt, according to Tim Ash, an economist at Standard Bank.

    "But if the crisis in Ukraine deteriorates further, and we see sustained capital flight and pressure on the ruble and Russian markets further, then it is possible," he said.

    Russia's response was prompt.

    First, in retaliation to the downgrade, Russian economy minister Alexei Ulyukaev said S&P's downgrade of Russia's rating was expected by investors, won't significantly change their behavior, adding the obvious that the decision to cut Russia's rating was partly political, partly based on economic situation. In other words, entirely symbolic - it is not as if Russia has access to bond markets anyway, plus as we wrote earlier this week in "Why Putin Is Smiling At The Bond Market's Blockade Of Russia", it is not as if it needs them.

    But far more importantly, and ahead of yet another round of western sanctions which appears imminent unless Obama is to look even more powerless than he currently is (granted, a difficult achievement), Russian presidential adviser Sergei Glazyev proposed plan of 15 measures to protect country's economy if sanctions applied, Vedomosti newspaper reports, citing Glazyev's letter to Finance Ministry. According to Vedomosti as Bloomberg reported, Glazyev proposed:

    • Russia should withdraw all assets, accounts in dollars, euros from NATO countries to neutral ones
    • Russia should start selling NATO member sovereign bonds before Russia's foreign-currency accounts are frozen
    • Central bank should reduce dollar assets, sell sovereign bonds of countries that support sanctions
    • Russia should limit commercial banks' FX assets to prevent speculation on ruble, capital outflows
    • Central bank should increase money supply so that state cos., banks may refinance foreign loans
    • Russia should use national currencies in trade with customs Union members, other non-dollar, non-euro partners


    In other words, a full-blown scorched earth campaign by Russia.

    Granted, Russian holdings of US Treasurys are not that substantial (and could be monetized entirely in three months of POMO by the Fed), and western financial linkages to Russia, aside from trade routes, are not life-threatening, but if Russia were to take the baton, and other BRIC countries, already furious by the recent US decision to not boost their IMF status, follow suit, then Obama's life is about to become a living nightmare. Especially, if that most important BRIC member - China - does any of the many things it can do to indicate if, in this brand new Cold War, it is with or against the US...

    Finally, those curious what are the linkages between the west and Russia are, review our recent post on the matter: All You Need To Know About Russia, In Charts."

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