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Is Gold the Reason for the Ukraine Conflict?

I have had John Perkins, author of the best-selling book Confessions of an Economic Hit Man, on my show several times and he has always talked about the fact that wars are basically waged, including wars carried out by the U.S., for self-centered economic reasons.  John has opined on my show several times that one of the major reasons we went to war against Saddam Hussein was because he demanded euros rather than dollars for the sale of his oil. You can listen to my latest interview with Perkins at http://www.miningstocks.com/radio/radio_archives/taylor20130903-3.mp3.

The U.S. had essentially robbed the rest of the world for several decades now by using its power to force a bastardized and wasting currency on the rest of the world.

But there is a growing number of nations that are sick and tired of being fleeced by the United States. And a couple of those more powerful countries are starting to flex their muscles as the U.S. and NATO threaten their national sovereignty. Daniel McAdams talks almost weekly about NGO’s with human-sounding names, fermenting revolution in places like Syria and the Ukraine and in some cases, such as the Ukraine (but not only), generating revolutions against elected leaders if they won’t buy into the U.S. dollar-based economic system. 

And so now the BRICS (Brazil, Russia, India, China, and South Africa) are setting out to build up their own financial and trading institutions as a means of better defending themselves. The U.S. will use its intelligence operatives to ferment dissidence and then, as in the case of the Ukraine, put in a puppet who will lean toward NATO even it if is not in the best interest of the country.

David Jensen has proposed a theory about why we are itching for yet another war, this time in the Ukraine. David thinks it is possible if not even likely that because all the gold is now disappearing from the West and is heading to China (thanks to gold market manipulation by our major banking institutions on the New York and London markets) that the fake futures markets in the U.S. will soon explode to the upside when widespread failure to deliver gold finally shakes confidence in the dollar and the U.S. financial system. David theorizes that in order to put the blame somewhere other than on the massive market manipulation of the gold price by J.P. Morgan, Goldman Sachs, and some of the other usual suspects, we pick a fight with Putin so we can blame him for a gold price that goes berserk.

Indeed, as reported at InGoldWeTrust.ch, moves are very much underway that certainly threaten the U.S. dollar’s dominance, including stories from several news outlets in Russia reporting that Russia, Kazakhstan and Belarus, which currently form the Eurasian customs union, will sign an agreement in May to accelerate the formation of an economic union and a joint currency known as the Altyn.

On the territory of several Russian principalities, the currency Altyn has been circulating from the 15th century until 1991. Originally it was made of copper; the silver Altyn appeared during the time of Peter the Great. While the area shown above on the global map is a large geographical area, the population is relatively sparse. However, as the U.S. is threatening China and other Asian nations with Obama’s so-called “Pivot” and as we side with Japan against China, it is clear we are forcing China to warm up to Russia and no doubt quickening a move to set up their own financial system that threatens the misused privilege the U.S. has enjoyed to print money.

So the big question remains. How much longer can gold be kept down by the scandalous paper markets in New York and London, where a handful of major financial institutions push huge amounts of buy and sell orders on those futures markets? As David has been noting on my radio show, the GoFo rate, which is short for the gold forward rate, has been higher in the spot market than in the future. But that has been the case now for a huge number of days over the past half-year or so. The inset on the chart below shows that, starting around July 4, 2013, the GoFo rate turned negative for both the one-month and three-month periods of time. While it turned positive for a short while, so far during the past two or three weeks, it has turned negative once again.

Since it costs money to store gold and because of the time value of money, under normal circumstances it is cheaper to buy gold now than to take out a contract to buy it in the future. But the fact that the GoFo rate has turned negative not just for a day or two as in the past, but now almost every day over the past several weeks suggests there is panic buying of physical gold. 

When I finished my show with Jim Rickards last week, his sense was that the currency wars are starting to really speed up (http://jaytaylormedia.com/media/taylor20140422-3.mp3). There is more and more evidence, I believe, that that is true and the GoFo rate may indeed be the canary in the coal mine.

Jay Taylor



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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