KW: Latest newsletter from Rickards with interesting news not reported in mainstream

• Russia and China set up central bank branches in each other’s capitals to bypass the dollar…
• The timeless lesson the U.S. might learn the hard way when Russia and China make their move…
• Then Jim Rickards shows you how Russia and China are leading the “axis of gold” that’s leading the world away from the dollar…

Dear Reader,

We’ve heard for a long time that Russia, China and other nations are moving to displace the U.S. dollar as the benchmark global reserve currency.

Well, clear evidence in now emerging that the pace of change in the monetary system is quickening. China and Russia have moved beyond rhetoric and are now taking concrete steps to build their own payments systems free of U.S. control and U.S. dollar denomination.

In September, the People’s Bank of China laid the foundations for the issue of yuan-denominated bonds in Russia.

And now Russia has opened a new bank branch in Beijing. And it’s not just any bank. It’s the Central Bank of Russia, headed by Elvira Nabiullina, one of the best central bankers in the world.

Why would a central bank need a branch office in a foreign country? That’s something commercial banks do all the time, but it’s more unusual for a central bank.

The reason is that the Russian government is planning to issue bonds denominated in Chinese yuan. The yuan proceeds can then be used to invest in Chinese infrastructure or buy Chinese gold free of interference by the U.S. and without using U.S. dollars.

Russia obviously wants a front-row seat in Beijing as financial dealings between them grow more intertwined. It’s also convenient for Russian and Chinese financial officials to meet in person to avoid electronic message traffic that is monitored by the U.S.

Consider this one more step down the path leading to the end of the dollar as the benchmark global reserve currency.

Meanwhile, both Russia and China are also accumulating substantial gold hoards.

Why are Russia and China seeking gold so urgently if it’s not money? The answer is that gold is money, something the U.S. may find out the hard way when Russia and China make their moves toward a gold-backed international monetary system and leave the dollar in the dust.

But if Russia and China aspire to be true gold powers, and they do, it’s not enough to have physical gold. It’s also critical to create gold exchanges and gold markets that aren’t subject to Western price manipulation of the paper gold market.

Currently the price of gold is set in two places.

One is the London spot market, controlled by six big banks including Goldman Sachs and JPMorgan Chase. The other is the New York gold futures market, controlled by Comex, which is governed by its big clearing members also including major Western banks.

In effect, the big Western banks have a monopoly on gold prices even if they do not have a monopoly on physical gold.

But that’s about to change.

Russia and China are not only building up physical reserves; they are building trading systems that bypass these paper-based systems. It may take a year or so to attract liquidity, but once these new exchanges are fully functional, the Western monopoly on paper gold manipulation will be broken.

At that point, the physical gold market will regain the upper hand as a price-maker. Then gold will commence its march to monetary status and its implied nondeflationary price of $10,000 per ounce.

Russia and China are building up gold reserves and creating alternative nondollar payment systems to end the hegemony of the U.S. dollar as the benchmark global reserve currency. But ending the dollar’s role is not an end in itself; it’s a means to an end.

A sound currency has always been the foundation of strong military and political power. That has been true since ancient Rome, throughout the Middle Ages and into the modern age. The opposite is also true. A weakened and debased currency goes hand in hand with declining political and military fortunes.

The British Empire in the 20th century is a perfect case study of the decline of a currency causing a decline in political power. Today the U.S. is repeating the mistakes of the British.

The march of gold precedes the march of military forces. Will the U.S. wake up in time or will it go the way of Rome and the British?

As China’s gold reserves go up, its military and political assertiveness goes up at the same time. Just look at its military buildup in the disputed waters in the South China Sea. Russia is just as aggressive, from Crimea to the Caucasus.

Currency declines start slowly but accelerate in the end stages, just like patrons fleeing a burning theater — a few lucky ones get out first while the crowd ends up jammed at the exit with no way out.

The bottom line is that China and Russia are creating their own gold-trading system and building their own payments systems to break free of U.S. dollar denomination.

Look for the tempo to increase from here.

Below, I show you how Russia and China are leading a growing “axis of gold” to displace the dollar in global markets. Read on.

Regards,

Jim Rickards
for The Daily Reckoning

Articles:

http://www.scmp.com/news/china/diplomacy-defence/article/2079648/russian-central-bank-opens-first-overseas-office

https://sputniknews.com/business/201508161025811280-russia-china-gold-market/