By John Ward (The Slog) - The Rouble has suffered its biggest day fall for 16 years. It dropped 7.1% against the $US. The oil collapse that – as predicted here last year – started the plunge has the Texas Tea now down at just over $72. And in reaction – or as merely one of its sap-magnet ‘rallies’ – Gold has been leaping ahead today: it rose $53 to 1204 after one slight pause as the NYSE opened.
But was it a reaction….and if not, was it a manipulated rally?
Last week an East European contact insisted to me that Vladimir Putin is doing both of the following: selling oil at huge discounts in direct gold swaps; and when he can only sell in Dollars, immediately piling into Gold with the bucks he gets. That followed a blog from Dmitry Lkinechenko on the Gold Eagle site a few days earlier confirming the latter of the two selling modes.
The gold stats available confirm that this isn’t just blogosphere bollocks: in this final quarter so far, Russia has purchased a staggering 57% of all global gold….in order to stockpile ammunition for the fight.
But in the medium-term, he too will run out of road. His readiest customer for cheaper-than-cheap oil remains China, but China too is decelerating so hard there are sparks under the tracked wheels….and as I’ve blogged many times before, Russia’s energy-lopsided economy is even more unidimensional than our bank-paper economy.
In the meantime, yet another Russian leader finds the Winter coming to his aid: whatever Washington dictates, when the temperature drops, Russian neighbours need oil and gas.
This is how I read what’s going on: there is a slump, there is fiat currency overvaluation, and there is a geopolitical war starting. Oil and gold are driving, directly or indirectly, pretty much all of it.