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After the Crash – Those who have the gold make the rules

After the Crash – Those who have the gold make the rules

Shanghai gold delivery

Shanghai gold delivery

The binary, black-and-white mindset imposed through a renewed cold war hysteria (Of dragons, eagles and bears…and the rise of a new world order, FuturAbles, 7 July 2014) has been employed to mislead Europeans into believing that, unless they strengthen their ties with the Atlantic Pact – turning a blind eye to illegal wars, drone killings, CIA rendition flights and torture, mass surveillance and mass incarceration, Guantánamo, commodities markets rigging, corporations-friendly free trade agreements, private debt-fueled binges, moribund banking system, repeated real estate bubbles, etc. –, their fate will be sealed (Europe Torn Apart in the Asian Century? Carnegie Europe, 1 July 2014; China Steps In as World’s New Bank, Bloomberg, 25 December 2014).

Whether the U.S. establishment likes it or not, emerging economies are about to decouple from the dollar because they can no longer tolerate the permanent destabilisation of the international financial system caused by the Federal Reserve, Bank of England and Anglo-American banking interests (see Nicholas Shaxson, Treasure Islands: Tax Havens and the Men who Stole the World, 2011; British Lord fell for $15 trillion federal reserve scam, Daily Caller, 25 February 2012; Banks Launder Billions of Illegal Cartel Money While Snubbing Legal Marijuana Businesses, Huffington Post, 17 January 2014).


Ever since the 2007-2008 crash, foreseeing an even bigger, much much bigger, market fall-out (Five reasons why markets are heading for a crash, Telegraph, 2 December 2014), emerging countries have been hoarding devalued oil, gold and silver – priced in US dollars –, as a strategic reserve. Russia is selling oil for dollars and, with those dollars, is immediately buying gold, divesting itself of dollars/U.S. government bonds. Together with China, it is getting ready to launch a new global financial paradigm, with an alternative payment systems.

Rules are set by those who control the gold:

What is new is it’s not just Russia snapping up gold. China, India, and many other emerging economies have also been snapping up gold lately, says Ashish Bhatia, a director at the World Gold Council. He says this is a big sea change in the gold market. Bhatia says up until a few years ago, central banks were selling their gold assets.

Russia, China, India Central Banks Buying More Gold as Oil Prices Drop, MetalMiner, 15 December 2014

Such a moment would seem ripe for Russia and Iran to begin a gradual challenge to Saudi’s leadership of the OPEC cartel and to the dollar-denominated energy system, if enough OPEC members and other producers are prepared to rebel. Iran has been lobbying hard in this direction.

Non-Dollar Trading Is Killing the Petrodollar — And the Foundation of U.S.-Saudi Policy in the Middle East, Huffington Post, 2 December 2014

Using SWIFT in this way [as a weapon – author’s note] could lead to the creation of a rival. Russia’s central bank is pre-emptively working to develop an alternative network; China has also shown interest in shifting the world’s financial centre of gravity eastward. Earlier this year it co-founded a BRICS development bank with Russia, India, China and South Africa, and its UnionPay service, set up in 2002, has loosened the stranglehold of MasterCard and Visa on card payments. If China and other countries that feared being subjected to future Western sanctions joined the Russian venture, it might become an alternative to SWIFT

The pros and cons of a SWIFT response, Economist, 22 November 2014

 It’s all part of the shifting of power from West to East (Will this be the ‘Asian century’? Guardian, 18 April 2012; ‘Asian century’ will dominate global financial markets, Financial Times, 7 April 2014; Armenia Joins Eurasian Economic Union, as Kyrgyzstan Edges Closer to Membership, Astana Times, 13 October 2014).

China is on its way back to being the dominant world power (cf. Jean-Joseph Boillot et Stanislas Dembinski, Chindiafrique. La Chine, l’Inde et l’Afrique feront le monde de demain, Odile Jacob, 2013) and the China Business Forum for Chinese and German-speaking decision-makers and experts, to be held in Vienna in June 2015, is poised to become an annual event.

This transition will have a stabilizing effect in world power politics:

With rich experience in infrastructure building and manufacturing, China is ready to contribute to India’s development in these areas. India is advanced in IT and pharmaceutical industries, and Indian companies are welcome to seek business opportunities in the Chinese market. The combination of the “world’s factory” and the “world’s back office” will produce the most competitive production base and the most attractive consumer market.

As the two engines of the Asian economy, we need to become cooperation partners spearheading growth. I believe that the combination of China’s energy plus India’s wisdom will release massive potential. We need to jointly develop the BCIM Economic Corridor, discuss the initiatives of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and lead the sustainable growth of the Asian economy.

As two important forces in a world that moves towards multipolarity, we need to become global partners having strategic coordination. According to Prime Minister Modi, China and India are “two bodies, one spirit.” I appreciate this comment. Despite their distinctive features, the “Chinese Dragon” and the “Indian Elephant” both cherish peace, equity and justice. We need to work together to carry forward the Five Principles of Peaceful Coexistence (the Panchsheel), make the international order more fair and reasonable, and improve the mechanism and rules of international governance, so as to make them better respond to the trend of the times and meet the common needs of the international community.

Xi Jinping, Towards an Asian century of prosperity, The Hindu Times, 17 September 2014)

We are heading for a multiple global reserve currency system in an English-speaking world dominated by the Chinese economy (Xinhua Insight: Time to seize the opportunity of China’s “new normal”, Shanghai Daily, 14 December 2014; Romano Prodi, La Cina in Europa: non solo acquisti ma investimenti e collaborazioni scientifiche, The People’s Daily, 2 December 2014; We are all connected. Then and now, WazArs, 16 November 2014; For a New World Order to live well, one in which WazArs would flourish, WazArs, 2 October 2014).

Speculation on oil prices (Stakes are high as US plays the oil card against Iran and Russia, Guardian, 9 November 2014; Ruble, Oil, Shale Gas, Derivatives and American Hegemony, The Vineyard of the Saker, 23 December 2014) may well bring down the entire Western financial architecture sooner than the Russian (or Iranian, Venezuelan) economy:

There is unlikely to be a happy ending to falling oil prices for highly leveraged US energy companies, and it is wrong to assume that there is no interconnectedness between the companies, banks, hedge funds and other organisations that trade derivatives based on the oil price. One should also not assume that losses in one sector and among one group of counterparties can be contained and contagion can be so easily prevented.

A real danger to global financial system from oil price collapse, Financial Times, 18 December 2014


A return to a veritable gold standard is nevertheless unlikely. More likely is that the global markets will determine the value of currencies (and therefore of renminbi, rupee, rouble, and euro currency zones) based on the amount of gold (established through independent audits) held as a reserve, without direct backing (Swiss, French call to bring home gold reserves as Dutch move 122 tons out of US, RT, 28 November 2014).

As of late, because of the obdurate and self-defeating American opposition, the use of SDR’s as the new world reserve asset has become increasingly unviable, for it is hard to imagine that BRICS nations, the most vocal advocates of a multi-polar world, will put up with a system severely limiting national sovereignty and doing very little to adjust the massive imbalance between debtor and creditor nations. Only a reformed IMF, in a post-imperial world, would lead to such an agreable outcome.

Finally, this global financial reset implies a much higher price for gold.

Silver price will also shoot sky high (India Snatching Up Swiss Gold, Silver, Forbes, 3 August 2014).

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About stefano fait

Social forecaster/horizon scanner, entrepreneur, Arts and Culture reporter for "Trentino" & "Alto Adige", social media & community manager, professional translator, editor-in-chief of futurables.com, peer reviewer and contributor for Routledge, Palgrave Macmillan, University of British Columbia Press, IGI Global, Infobase Publishing, M.E. Sharpe, Congressional Quarterly Press, Greenwood Press. Laurea in Political Science – University of Bologna (2000). Ph.D. in Social Anthropology – University of St. Andrews (2004). Co-author of “Contro i miti etnici. Alla ricerca di un Alto Adige diverso” (2010)

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