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Golden Yuan World Reserve Currency After Volcker Dooms the Dollar

MP3: Discussion with Jay Taylor taped September 15, 2014.


Topics

1. Shanghai Gold Exchange and Shanghai Metal Exchange physical metals premia vs. LBMA pricing:

SGE Gold: $1,240.27 /oz & premium of $ 6.02/oz. = +0.5 % premium vs LBMA vs. +0.8% last week

SGE Silver: $20.85 /oz & premium of $2.21 /oz. = +11.8% premium vs LBMA vs. +11.4% last week

SME Palladium $982.29 /oz & premium of $141.29 /oz. = +16.8% premium vs LBMA vs. +18.2% last week

SME Platinum $1,455.72 /oz & premium of $87.72 /oz = +6.4% premium vs LBMA vs. +7.4% last week

The above Shanghai prices include a 17% VAT tax. It is important to look at this entire price as that is what is payed in Shanghai for metal.

This price premium creates a strong pull for metal from the west in the 'off exchange' market.

In 2013 only 40% of China's 1.8 million ounce palladium consumption registered as imported metal yet China has negligible production of palladium.

Shanghai Futures Exchange silver inventory at 93 tonnes and Shanghai Gold Exchange inventories at 75 tonnes.

China produces ~ 9,000 tonnes of silver p.a. or roughly 30% of global production.

2. Indian silver price at 13.5% premium vs 12% last week. Mumbai gold at 12% premium to LBMA. 10% import tax on gold and silver.

3. New Shanghai Free Trade Zone (FTZ) Gold Exchange for foreigners to trade physical yuan for physical gold - FTZ Exchange Chairman says goals include "boost use of Yuan currency,... ..., and help pave the way for the Yuan to become a global currency... .... we're also attempting to be a hub where gold can be traded and shipped elsewhere..." http://www.bloomberg.com/news/2014-09-11/gold-trading-to-begin-in-ftz-as-cme-plans-futures-in-hong-kong.html

FTZ gold exchange's goal appears to be to make Yuan interchangeable with gold - a prerequisite for it to be a globally accepted currency.

Return to stable gold monetary system abandoned with creation of Federal Reserve and attendant destabilization of the US Dollar.

NOTE: On September 16, 2014 an announcement issued that the FTZ exchange is opening early on September 18, 2014 - same day as Scottish independence vote - vs. originally planned September 29, 2014 opening.

http://in.reuters.com/article/2014/09/16/china-gold-contract-idINKBN0HB0AZ20140916

4. Paul Volcker "I certainly was a major proponent of suspending gold convertibility, in fact the principal planner." http://www.nber.org/feldstein/Feldstein%20Volcker%20Interview.pdf (H.T. Darryl Schoon)

Effective scuttling of the USD occurred in 1971. All global trade currencies have historically been gold or silver and Volcker's completion of removal of the dollar's golden foundations in 1971 made toppling of the dollar inevitable.

Volcker, as former assistant to David Rockefeller when he was CEO of Chase Manhattan Bank, David Rockefeller himself, Henry Kissinger, George Shultz all lobbied for the decoupling of the dollar from its essential underpinning.

All are promoters of globalization, they are Bilderberg Group attendees which group was created by Rockefeller and Rothschilds to promote centralizing global corporate control. The Bilderberg agenda is of destabilization of nation states and centralization of power with supra-national structures.

Founding meeting to create Federal Reserve at Jekyll Island, Georgia in 1910 featured representatives of Rockefeller, Rothschild (Morgan), and Warburg banking interests and was at the Rockefellers' Indian Mound Cottage. Undermining of gold money stability with initially 'elastic money' then sequential removal of gold from backing (FDR's gold confiscation from US citizens in 1933 & Nixon's default on gold exchange to foreign holders in 1971).

Federal Reserve Act created central bank with elastic money where the Fed enabled to create more debt-based money than there was gold in treasury. Led to 6x USD being issued vs actual gold backing at time of 1971 Nixon default.

Now crisis today with gold (and silver) trading having both been converted into trading virtual Fiat Gold and Fiat Silver through the LBMA (85% of global gold trade) and the COMEX. Gold pricing largely decoupled from actual physical exchange of metal and set with virtual gold exchange priced in virtual USD.

Gold (wealth) flowing to Asia now and West is now becoming impoverished some say very much in line with globalist ambitions.

UBS says gold to drop, rates to rise with stronger USD: http://www.portfolio-adviser.com/news/macro-news/gold-predictive-powers-to-return-ubs

  • UBS: Physical demand gold to be overwhelmed by USD increase in determining price.

Virtual fiat gold and fiat silver trading in London and New York settled in fiat currency - will be ended by physical market shortage. Physical metal demand is key vs. what UBS promotes in above article.

Question is which physical metal will see shortage and skyrocketing premia first: gold ( new FTZ) or more physically rare silver, palladium, platinum. Watch esp. Asian metals markets and inventories.

From several centuries of data, we know rising gold price to force rates up.

Federal reserve is also talking about rates rising sooner as Shanghai FTZ gold exchange comes on line creating additional physical gold demand. Gold to drive rates not Fed talk. Fed likely sees what is coming.

5. UK announces issuing Yuan denominated bond http://www.bloomberg.com/news/2014-09-12/u-k-to-sell-first-yuan-denominated-bonds-for-currency-reserves.html

Impending gold convertibility of Chinese Yuan at Shanghai FTZ with opening of foreign Yuan for gold exchange.

Small step for UK but perhaps first step in anticipating currency crisis. UK positioning with implicit gold-backed bond issuance because Yuan is interchangeable with gold in size at the Shanghai FTZ.

UK Chancellor of Exchequer George Osborne says UK dialogue with China seen as "...a statement of British confidence in the potential of the RMB to become "the main global reserves currency" ..." http://news.xinhuanet.com/english/business/2014-09/13/c_126981640.htm

What will US do?

 

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