Tuesday, July 18, 2017

Russia's new connection with Shanghai Gold Exchange will facilitate replacing petrodollar with gold backed energy trading

Over the weekend there was a rather innocuous event that took place, and it did not receive much press in the Western world.  However Sberbank's acceptance onto the Shanghai Gold Exchange, and their beginning of direct gold trading in the world's largest physical gold market, means that the mechanism to replace the Petrodollar is now here, and it is very likely to be a worldwide gold backed system.

Russia’s largest bank, state-owned Sberbank, announced that its Swiss subsidiary had begun trading in Gold on the Shanghai Gold Exchange. 
Russian officials have signaled that they plan to conduct transactions with China using Gold as a means of marginalizing the power of the USD in bi-lateral trade between the 2 powerful nations. 
The formation of a BRICS Gold marketplace could bypass the US Petrodollar in bi-lateral trade in the energy sector. 
According to a report published by Reuters: “Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kg of gold kilobars sold to local financial institutions, the bank said. 
Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5-6 tonnes of Gold to China in the remaining months of Y 2017. 
Gold bars will be delivered directly to the official importers in China as well as through the exchange, Sberbank said.” 
Notably, Russia’s 2nd-largest bank VTB is also a member of the Shanghai Gold Exchange. 
There is a transformation underway of the global monetary system.The implications of this transformation are profound for US policy in the Middle East, which for nearly 50 years has been underpinned by its strategic relationship with Saudi Arabia. 
The USD was established as the global reserve currency in Y 1944 with the Bretton Woods agreement, commonly referred to as the Gold Standard. The US leveraged itself into this power position by holding the largest reserve of Gold in the world. The “Buck” was pegged at $35 oz, and freely exchangeable into Gold. 
By the 1960’s, a surplus of USDs caused by foreign aid, military spending, and foreign investment threatened this system, as the US did not have enough Gold to cover the volume of Buck in worldwide circulation at the rate of $35 oz, the result was and overvalued USD. 
America temporarily embraced a new paradigm in Y 1971, as USD became a pure fiat (paper) currency decoupled from any physical store of value sans the GDP of the US, until the petrodollar agreement was concluded by President Nixon in Y 1973. 
The quid pro quo was that Saudi Arabia would denominate all Crude Oil trades in USDs, and in return, the US would agree to sell Saudi Arabia military hardware and guarantee the defense of The Kingdom. 
A report by the Centre for Research on Globalization clarifies the implications of these most recent moves by the Russians and the Chinese in an ongoing drive to replace the US petrodollar as the global reserve currency.
In March of Y 2017 the Russian Central Bank opened its 1st overseas office in Beijing as an early step in phasing in a Gold-backed standard of trade. This would be done by finalizing the issuance of the 1st federal loan bonds denominated in RMB Yuan and to allow Gold imports from Russia. – Live Trading News
The facilitation of a replacement to the Petrodollar system appears to have been the primary reason why both Russia and China have been accumulating gold in vast quantities over the past five years.  And with the world awash in record debt and devaluing fiat currencies, backing oil, which is the real currency of international trade, with gold will be the final nail in the coffin for dollar hegemony, and shift the balance of financial power away from the West, and into the hands of the newly emerging economic superpowers of Eurasia and the Far East.

0 comments:

Post a Comment