Dear Reader

One of the most noticeable characteristics of geopolitical events in the last five years has been the speed of change.  Shifts in power seem to come rapidly, with the definite sense that instability is accelerating in certain regions of the world.  If we keep a close eye on events we can sometimes see changes coming from a distance. And then suddenly they rise to the fore. Recently Russia is one such example.
 
We at Bleyer have been tracking Russia’s moves, both geo-politically and in regards to Gold, for quite some time.  For a general introduction we hope you enjoy one of our previous blog entitled, ‘Putin isn’t that Silly’ (December 2014). In that we wrote that, “The Russian economy remains in the grip of a ‘perfect storm’ of low oil prices, looming recession and Western sanctions over the Ukraine crisis.” (Reuters) At the moment, Russia needs to sell foreign currency to buoy its system. But if the pressure gets really bad, the only option might be to sell its Gold.  And that is what we believe Putin’s opposite chess players are after.  Flood the global market with cheap stored oil. Push price of oil down. Russian has to balance the books by selling its assets (gold). Russian has to sell gold at a discount. Buy Russian’s Gold. Stop the flood of stored oil onto the market. Gold price goes up. And oil price goes up. It’s clever. Because it looks all about the ruble and oil.  But it’s not. I believe it’s all about the ruble, and gold. But we don’t think Putin is that silly, hence the title of this week’s blog. We’re not saying we wouldn’t like him to be but we think the bear unfortunately mustn’t bear underestimating. If he’s backed too far into a corner there are all sorts of mutual alliances he might make in a counter move.”  
 

Just ten months later this counter move of unpleasant alliances is exactly what we are now seeing.  Here is an interview by the Wall Street Journal printed two days ago! It is Assad’s first interview since Russia begun air strikes last week: 
 
“Syrian President Bashar al-Assad said Sunday that his coalition with Russia, Iran and Iraq must succeed in Syria’s war, suggesting the alternative would be a region in chaos. The alliance “must succeed, otherwise we are facing the destruction of the entire region and not just one or two states,” Mr. Assad said in the Islamic Republic of Iran News Network interview.”  Let’s just read that list of allies again: Syria, Russia, Iran and Iraq. That’s not a healthy grouping of ideologies.  But it is exactly the sort of “mutual alliances” we alluded to back in December.
 

But that is not the only alliance Russia has been building. We have covered this in detail but Russia is extremely close to China, is its moves against the dollar. Why is this significant to Gold?  Because a Gold backed currency is the most logical safe haven when fiat currencies collapse.  And Russia and China seem to be positioning themselves as the owners of most of the world’s Gold in order to be the creators of that new Gold backed currency. And what will bring that global collapse?  Almost certainly, the collapse of the dollar and / or the euro, not necessarily in that order.  We at Bleyer are under no illusion that a currency war has been in action for quite some time:  “”If you had the means to acquire hundreds, or even thousands, of tons of gold, you’d want to do so as stealthily as possible in order to avoid tipping off the market.  If your strategic objective was to dramatically boost gold reserves over a period of several years, you wouldn’t want to see the price rise – at least not while you’re still accumulating. And if you had no ethical qualms about interfering in the market, you’d want to rig prices lower so you could obtain more ounces. Recently, in an effort to prop up the stock market, (the Chinese Government) tried to forbid people from selling shares of stocks. How heavily involved China is in managing the gold market is impossible for an outsider to know. But there is plenty of evidence to suggest that China is covertly buying gold while dumping U.S. Treasuries. JP Morgan analyst Nikolaos Panigirtzoglou calculated that China’s foreign exchange assets got depleted by $520 billion over the past five quarters. Most of that $520 billion in paper asset dumping comes, presumably, from China’s massive holdings of Treasury securities.” (Tyler Durden)

 
In other words, quietly dump the Dollar from your reserves and quietly acquire Physical Gold is China’s game-plan. And why would China do this? Because China wants to be the new super-power.  Here, we would add Russia also. It is a classic currency war against the Dollar, with Russia and China in a dangerous dance together against the U.S.: 

 

“Chinese officials aim to ultimately challenge America’s standing as the world’s superpower. That’s why they’re forming a strategic alliance with Russia, an adversary of the U.S. That’s why both the Russian and Chinese Central Banks have quietly emerged as the world’s largest gold buyers.” (ZeroHedge)  For more background reading on this please see another of our more recent blogs entitled, ‘Currency War: China, the Dollar and Gold’ (August 2015)

So, this week, we are not surprised by Putin’s moves into the war in the Middle East.  Yes, his jets are being used from Syria to bomb ISIS.  But I believe it is naive to think Putin is interested in supporting Syria.  It is more a case of “Your enemy is my enemy, therefore we are friends.”  Assad’s enemies are the West, most specifically the U.S. who are supporting the rebels against his government. So when a Russian jet bombs the rebels he is effectively sticking a finger in the eye of the American administration, while looking like a hero under the guise of “bombing ISIS”. It’s quite clever actually but then we never thought Putin was not clever. The ‘war’ between East and West seems to have very rapidly shifted from the currency arena into the actual highly dangerous military one.  Sadly, but realistically, we must remain aware that the price of Gold reacts to both collapse in currencies but also to wars; we have seen this time and time again throughout history. 

 

Some of this week’s news, if you look below the surface, sound alarming – to both international peace and the growing instability of Western economies: “Catastrophic Scenario: World War III may have begun on September 30“,  said French news outlets:  “World War III may have already started, noting that two events which emerged in Moscow and Gulf Area, can be seen as the trigger for a global confrontation.  History will remember perhaps 30 September 2015 as the smooth beginning of the Third World War.  World War I started back in 1914, with the assassination of the Austrian Archduke in Sarajevo on June 28.  At the time, obviously, nobody would have thought that this deadly attack which occurred miles away from the Austrian capital would lead to the Great War. French journalists say that everything happening now is because of the risky games played by the strong military alliances and the irresponsibility of the sleepwalking politicians who are governing the world leading it into an abyss.”  

Why does the author specify September 30th exactly?  Because on this date the following two events occurred:

1)  “Iran-Saudi Arabia seized two vessels belonging to Iran. The vessels were apparently filled with weapons designated to Yemen rebels. This routine check is seen as a hostile act. This incident comes amid a tense atmosphere between the two poles of Islam regarding the recent tragedy in Mecca, where many Iranians died while security was hosted by Saudi Arabia.

2)  Putin entered the war in Syria. On September 30th, Putin called for a Russian Parliament vote to authorize military operations in Syria.  We know that the Russians are allies of Bashar al-Assad regime and especially of the Iranians.  On the other side, the Western powers and the Sunni Gulf countries run their own military operations.  The two coalitions have completely opposite objectives.  It seems that the Russian bombing hit the positions of the rebels who are supported by the United States (information that has not been confirmed yet.”

I appreciate that this has potentially serious implications. We have always endeavored to bring our readers the side of the news that may not be spelled out in the mainstream media.  So, as a little light relief here is an antidote which is highly connected.  This week an international car rental company accidentally charged my bank account hundreds of pounds on a cancelled booking. They apologized and set in motion a full refund, including the normally non-refundable deposit as a sign of good-will. The free market working at its best – they hope that, by rectifying their mistake well, I will use them again in the future.  The snag is that – due to the banking system – the refund may take a few days to clear into my bank account. So I rang my bank to tell them that this several hundred pound error was not my fault, that I had an email from the car rental to that effect and that if this causes an overdraft, to please not charge me.  I was informed by the bank rep. that there is only one scenario when they refund overdraft charges and that this wasn’t it.  After getting no where on the set charges I then moved onto the question of refunding any accrued overdraft interest, on matter of principle; surely that would be good customer service. Actually, surely that would be any customer service, just basic, not good.  The bank rep, dismissed this in saying “it would just be a few pence.” Have we as customers ever tried going a few pence overdrawn and seeing if the bank would dismiss the issue?  I almost laughed. Now this isn’t a serious situation and it’s more the principle. My money is in the bank but the bank control it. 

Not so with Physical Gold and Silver. 

And here’s the connection with Russia and China. Imagine how the banking system would behave with our money if, or rather when, our pound collapses.  We saw it with Northern Rock. We saw it in Greece. We saw it a few years ago in Cyprus, and before that in Argentina.  When currencies collapse the banking system limits your access to your own fiat currency.   That is because it is currency, not money.

And if we think bank charges are annoying, wait until we are charged a tax for simply carrying cash!  Yes, this is a development – together with the “reason” cited this week in ZeroHedge:  ” The financial system is predominantly comprised of digital money. Actual physical Dollars bills and coins only amount to $1.36 trillion. This is only a little over 10% of the $10 trillion sitting in bank accounts. And it’s a tiny fraction of the $20 trillion in stocks, $38 trillion in bonds and $58 trillion in credit instruments floating around the system. Suffice to say, if a significant percentage of people ever actually moved their money into physical cash, it could very quickly become a systemic problem. Indeed, this is precisely what caused the 2008 meltdown, when nearly 24% of the assets in Money Market funds were liquidated in the course of four weeks. The ensuing liquidity crush nearly imploded the system. Because of this, Central Banks and the regulators have declared a War on Cash in an effort to stop people trying to get their money out of the system. One policy they are considering is to put a carry tax on physical cash.”  Just as highlighted by us, the entire article quoted above is entitled ‘How and why banks will seize deposits during the next crisis.’

But here at Bleyer we believe strongly that Physical Gold and Silver is the antithesis of a banking system built on fiat currency. Gold and Silver are real money and always have been. Whether you store your coins and bars in your house or with our secure allocated storage on or offshore, it’s your Gold and Silver and you have the right to have and hold it how you like, when you like. In light of all we saw in Greece this summer, we can’t emphasize enough how important this is.  

But if I were a reader of my own blogs, I would at some stage intelligently ask, “But is this all just fear mongering? After all, fear sells. Or is the East really at war with the West? Could Russia and China really collapse the dollar and with it our current fiat system? Could World War III really be possible?”

Let’s look at that in two parts, firstly economically, and specifically in regards to Gold.  You have to look to find it but here is a little-noticed piece found in a very reliable place, in the Metals Mining news quarters. Reliable, because it is close to the market of source for Physical Gold and Silver:

“As China has expressed it, the aim is to enable the Eurasian countries along the Silk Road to increase the gold backing of their currencies. That sounds very much like some clear-thinking and far-sighted governments are thinking of creating a stable group of gold backed currencies that would facilitate orderly trade free from Washington currency wars,” the economic researcher elaborated.  Engdahl names Russia, the world’s third largest gold producer, and South Africa, a major bullion miner and fellow BRICS member to China and Russia, as the two other countries most likely to benefit from the arrangement.”

Secondly, let’s look at that militarily.  Are there any physical signs, even beyond the Middle East, that Russia and America are maneuvering towards war?  

“The United States and Russia are geopolitical rivals and uneasy Arctic neighbors. More and more Russian and U.S.  military forces are deploying on and under the Arctic Ocean. But Washington and Moscow are approaching their Arctic build-ups quite differently. The Kremlin holds the advantage on the ocean’s surface; the Pentagon dominates beneath the waves. Though Russia and the United States both train Arctic ground troops, Washington is also building a northern strike force of high-tech stealth warplanes.”

This dramatic description of active training for warfare was reported only two days ago in Reuters! It reads like a Second World War manuel but with more up-to-date technology. It concludes with some puzzling words: “In a kind of literal Cold War, Russian forces will continue to dominate the surface of the Arctic Ocean while the American military preserves its edge below and above the ice. Meanwhile, both countries are training thousands of ground troops for Arctic ops — just in case the Cold War turns hot in the thawing polar region.” Here’s a question I asked myself – if something is a “kind of literal” Cold War isn’t that kind of, like, a literal war?! 

Who of us would have thought, just five years ago, that a European news outlet would call for Russia to become the new super-power instead of the United States? And yet this is exactly what happened in the Czech newspapers this last week:  “”Leadership [of the international community] has to be given to Russia,” the journalist said.” This Czech piece then found its way, not surprisingly, into the Washington Times.

As always, we therefore encourage our clients and readers to watch what Russia (and China, Iran, Iraq and Syria) are up to and copy their strategy of accumulating Physical Gold (and Silver.)  We may not agree with their idealogies to at least see how they are positioning themselves quite obviously in the Physical Gold and Silver markets.  China and Russia do not care that the price has consolidated, in the sense that the paper price bears no relation to their desire to accumulate the physical, and we believe neither should our buyers. In fact, prices currently present a buying opportunity.

If you are reading the news and agree with any of the points we have made we encourage you to get in touch. Bleyer enjoy great conversations with our clients and potential customers, so feel free to give us a ring for a no-obligation quote.  Some Gold and Silver products come with TAX advantages, so call now to find out more.  Owning your own Physical Gold and Silver is just one way to help protect you and your family’s wealth and security in these changing times.  

Throughout history, when a currency collapses, the population rushes into Physical Gold and Silver, usually too late as the price sky rockets out of their reach.  We are seeing an elongated buying opportunity as the paper price of Gold and Silver consolidates, keeping the price of the physical metal on a general plateau. 

We recommend not waiting until the price begins to run.  Browse our website now for Gold and Silver bars and coins now and call one of the Bleyer team to find out more about holding your Gold in a Pensionsafes and secure storage and our current special offers.