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Raging Inflation, A Collapsing Economy/Stock Market And Gold In Uganda

The idea that Vladimir Putin is responsible for the raging price inflation in the U.S. – as “Joe Biden” first claimed in a speech a couple of months ago, calling it “Putinflation” – is patently absurd. The Fed, along with several of the largest Central Banks around the world are directly and indirectly the cause of price inflation. Supply chain disruptions and the U.S./EU sanctions on Russia are secondary exogenous variables that have exacerbated the problem created by bankers.

With all of the factors in place to support a big move higher in the precious metals sector (raging inflation, escalating geopolitical tensions, recessionary economy, etc), the recent market action is frustrating to say the least. To be sure, a certain percentage of the poor performance in gold, silver and mining stocks is attributable to the ongoing decline in the general stock market. It’s a bear market. As I’ve discussed previously, when capital pulls out of the markets (stocks and bonds), it pulls out of everything. March 2008 to late October 2008 is a good parallel to the current market.

Rob Kienz of GoldSilverPros.com invited me on to his podcast to discuss the Fed, inflation, the precious metals sector (gold, silver, mining stocks), Cathie Wood/ARKK and the Uganda gold claim.

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The precious metals sector looks like it’s ready for a major move higher, especially the junior exploration stocks – you can learn about my Mining Stock Journal here: MSJ information; and my Short Seller Journal subscribers have made a small fortune on the ideas I present weekly in my short seller’s newsletter: SSJ information. Home run short ideas include $ARKK $Z $OPEN $HOOD $DKNG etc.I have several more ideas lined up with substantial downside.

Will Raging Inflation Ignite Gold, Silver and Mining Stocks?

Inflation is something that happens to balloons. In this context it is an increase in the combined quantity of money, currency, and credit, which will tend to increase prices all else being equal. – Alasdair Macleod, Inflation Defined

NOTE: The commentary below is from my latest issue of the Mining Stock Journal.  I present several micro-cap junior ideas that I believe have home run potential as well as a discussion of how I’m playing the Gold Fields takeover of Yamana. You can learn more about my newsletter here:  Mining Stock Journal information.

With all of the factors in place to support a big move higher in the precious metals sector (raging inflation, escalating geopolitical tensions, recessionary economy, etc), the recent market action is frustrating to say the least. To be sure, a certain percentage of the poor performance in gold, silver and mining stocks is attributable to the ongoing decline in the general stock market. It’s a bear market.

As I’ve discussed previously, when capital pulls out of the markets (stocks and bonds), it pulls out of everything. March 2008 to late October 2008 is a good parallel to the current market. At some point there will be a catalyst, or catalysts, which triggers a positive divergence of the precious sector from the rest of the stock market. Again, look at a chart of GDX from November 2008 to March 2009. The most likely event will be the reversal by the Fed of its monetary policy. But that may not be necessary if price inflation continues to escalate – this would trigger a rush into physical gold and silver, something that seems to have started already at the retail level in the form of a big jump in sales at the U.S. Mint.

That said, gold continues to move in a steady uptrend that extends back to March 2021:

There have been several successful tests of that uptrend/support line along way. Currently gold seems to be holding its 200 dma. While anything can happen over the short term (next couple of months), I expect a big move in the sector sometime between now and Halloween. Also, keep in mind that the effort to prevent gold and silver from moving higher has been particularly aggressive since gold was turned back from $1975 in mid-April. But 85-90% of the time gold has been rising during the hours when the eastern hemisphere physical accumulators are trading and gets pushed lower once London and then NY open, which is primarily paper derivative gold trading. When gold shakes off the latest price control effort, it will shoot over $2000 and move higher from there. Similarly, silver is in a dog fight at $22. But once poor man’s gold prevails, it move higher toward $30 quickly.

I make the case for why the Fed likely will be forced to reverse its monetary policy eventually in this podcast produced for Arcadia Economics:

Housing Market Is Starting To Implode – Short $BLDR

NOTE:  The analysis below is from the May 22nd issue of my Short Seller’s Journal. In conjunction with this, my good friend and colleague, Greg from Silver Liberties has prepared a technical analysis video of the Builders FirstSource stock chart:  BLDR Technical Analysis.  You can access Greg’s work at his Patreon site, to which I subscribe.

BLDR is a supplier of building materials (lumber and manufactured components) to homebuilders, sub-contractors, remodelers and consumers. Examples of its products include lumber & lumber sheet goods, wood floor and roof trusses, wall panels, windows, doors, wallboard, exterior trim etc.

My rationale for shorting BLDR is that it is a “leveraged” play on the housing market and new construction. As with homebuilders, when the market is hot BLDR’s revenues and margins soar. But when the pendulum swings back the other way, as it is now, revenues and margins dry up quickly. BLDR’s numbers have benefited both from price inflation and several “roll-up” acquisitions which exaggerated revenue growth and doubled its debt load.

BLDR’s revenues actually declined from 2018 and 2019. Then in 2020 revenues increased 17.5% YoY due to the renewed new home construction boom and commodity price inflation, both products of the Fed’s monetary policy. From 2020 to 2021, BLDR’s revenues more than doubled from acquiring BMC West. Of course, its long term debt load also nearly doubled. Revenues in Q1 2022 rose 36.1% YoY. But 58% of that gain is attributable to the BMC acquisition and to price inflation.

The Company acknowledges that demand for single-family homes drives its top-line growth. But, as we’re seeing with new home sales, home sales have started to head south. Because of this, I believe that over the course of 2022, BLDR will experience a rapid slow-down in sales growth and profitability. Compounding this problem, BLDR’s debt load increased by another 15.9% during Q1 2022. Furthermore, the Company burned $1.7 billion of cash repurchasing stock in 2021 and another $354 million on repurchases in Q1 2022 (rather than paying down debt).

There’s also some financial red flags on its balance sheet:

First, inventories rose 34.6% in Q1 from the end of 2021. BLDR has been a big beneficiary of price inflation. Over the last couple of years it has been able to sell its inventory at prices well above the cost of building its inventory. But as new home demand declines, accompanied by falling single-family housing starts, BLDR will be exposed to considerable pricing risk. Recall the massive inventory write-downs taken by homebuilders in 2008 and 2009. That same dynamic applies to BLDR.

Another red flag is the rather plump asset value assigned to goodwill and intangible assets, which represents nearly 40% of BLDR’s assets. That $3.39 billion number assigned to goodwill is particularly troublesome. Goodwill is the amount paid for an acquisition over and above the fair value of the assets acquired. 76% of that goodwill number is a result of the BMC acquisition.

Goodwill is basically the value assigned to the various intangible “assets” of an acquisition, like brand names, customer relationships, any proprietary technology etc. That’s great when stock values are rising and the economy is robust. But goodwill can also be looked at as the amount that an acquiring company may have overpaid for the company acquired. At some point as the economics of BLDR’s business model deteriorate, that big goodwill plug will become a source of write-downs and income statement charges.

The same holds true for “intangibles.” BLDR’s intangibles are listed in the 10-K as value assigned to customer relationships, trade names, subcontractor relationships, non-compete agreements and developed technology. While goodwill is not amortized, the amortization expense of intangibles is run through the income statement. But when the housing market and economy goes bad, those “intangibles” will diminish considerably in value and will be another source of write-downs.

BLDR’s book value (stockholder equity) is $5.1 billion. But $4.8 billion of that book value is comprised of goodwill and intangible assets. As such, BLDR’s tangible book value is just $300 million. With a $3.4 billion debt load, BLDR has debt to tangible book value ratio of 10x. While this gives the Company earnings leverage in good times, when the cycle turns it will be a source of considerable financial stress.

Furthermore, BLDR does not have much room to incur inventory, goodwill and intangible write-downs (believe me, that’s coming eventually) before its book value goes negative. There will also be accounts receivable write-downs when the smaller, custom homebuilders go bust and BLDR becomes an unsecured bankruptcy court creditor.

The more I dig into BLDR’s 10-Q/K, the more I like it as a short idea. On the assumption that I’m correct about the housing market, and I believe my thesis is already starting to unfold, BLDR’s stock price will quickly deflate.

BLDR’s stock price a little more than doubled between mid-July 2021 and the end of 2021. Since then, it has already lost 29.4% of its value through Friday. In the chart above I plotted BLDR vs the Dow Jones Home Construction Index (DJUSHB) over the last five years. BLDR was tightly correlated with DJUSHB until July 2020.

I believe over the course of the rest of 2022, BLDR will, at the minimum, partially to substantially “catch down” to DJUSHB. Based on the current level of DJUSHB, this implies a price target of $30 for BLDR. But between now and the end of 2022, DJUSHB will continue to decline. I can see BLDR dropping to $20 by year-end. Keep in mind it was at $10 in March 2020.

My Short Seller’s Journal newsletter has features several ideas that have been huge home runs if not grand slams over the last 12 months, including CVNA, ARKK, HOOD, Z (Zillow), NFLS, DKNG among several others. You can learn more about SSJ here: Short Seller’s Journal information.

The U.S. Economy Is In A Recession Now – Gold, Silver Set To Soar

“We’ve seen a downturn in the price as expressed in the paper derivatives precious metals’ price. There hasn’t been any large scale physical selling of gold or silver. Coin dealers sell gold and silver on a daily basis to retail buyers and the bullion banks broker bullion from major gold bullion producers into the countries that are buying – India, Russia, China, etc – but I have not heard of any entity that owns a large amount of gold say ‘we have to sell 100 tonnes gold, bid wanted in comp…”

The economic and corporate earnings data continue to reflect an economy that is heading into a recession – a bad one, I suspect. 85% of the S&P 500 companies have reported their first quarter. The S&P 500 GAAP earnings are down 14% versus Q4 2021 and up only 1% year-over-year. If earnings were adjusted by just the highly massaged YoY CPI inflation rate of 8.3%, real YoY SPX earnings are down 7.5%. The general economic data, which I scrutinize weekly for my Short Seller’s Journal newsletter, began showing economic weakness last summer, after the round two stimmies were largely spent. The one area that continued to show robust activity was the housing market. But both home sales (new and existing) and retail sales (nominal) have been in sharp downtrend since the beginning of 2022.

Elijah Johnson invited on to his Liberty and Finance podcast to discuss the economy and, of course, gold and silver:

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The precious metals sector looks like it’s ready for a major move higher, especially the junior exploration stocks – you can learn about my Mining Stock Journal here: MSJ information; and my Short Seller Journal subscribers have made a small fortune on the ideas I present weekly in my short seller’s newsletter: SSJ information.

The Housing Bubble Has Popped

I’m starting to believe that the housing market may have hit a wall in April. The graphic below is my reconstitution of the two charts sourced from Reventure Consulting (RC). It’s self-explanatory:

Amusingly, I’ve noticed articles in the mainstream media which acknowledge that the market is slowing down but assert that “a crash is not likely.” For me, that sentiment puts me on “crash alert.” The housing market at peaks is like a runaway freight train without brakes. But when it runs out power, it tends to derail quickly. All off a sudden multiple-offer listings become “for sale” signs that sit followed by price cuts. Then, rather than chasing prices higher, prospective buyers wait to see how low price will go.d

Silver Liberties invited to have a conversation about the housing market. At the end we also chat about the precious metals sector:

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A portion of the above commentary is an excerpt from my latest Short Seller’s Journal . I’ve managed to hit several home runs in stocks like $HOOD, $DKNG, $ARKK, $Z, $CVNA, $MSTR etc. In my latest issue I lay out the case why I believe the homebuilders and related equities are no-brainer shorts. $RLGY is down 36.4% since I recommended it as short about two months ago. There’s several stocks that not homebuilders but directly related to the housing market that I have recently presented. I’m working another one for the next issue. You can learn more about my newsletter here: Short Seller’s Journal Information

“1984 Was Meant To Be A Warning – Not An Instruction Manual”

Back in 2004, I was chatting with the person who dragged me kicking and screaming into the precious metals sector in 2001. The problem with diving into the world of precious metals is that it’s the equivalent of involuntarily taking the “red pill.”  The truth-seeking news and analysis that accompanies researching the monetary and financial system opens your eyes to realities and truths that would never be encountered by limiting one’s source of information and news only to the mainstream media plus the Wall Street and Capitol Hill spin machines.

My biggest problem and source of anxiety is that once you “see” the red pill realities, you can not “unsee” them.

I recall that, after processing the tech bubble crash, Enron, 9/11 and the illegitimate attack on Iraq, my friend and I decided that eventually we would see events and occurrences that really blow our minds.  I can say with 100% conviction that the attack on free speech and the effort to eradicate it truly blows my mind.

“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.” (Orwell, “1984”)

A “Time” magazine columnist is the latest mainstream media writer to fire missiles at free speech. Incredulously, she argues that men care more about free speech than women – not sure how she comes to that conclusion other than simply regurgitating the vomit from a Stanford University Communications Department professor.

“War is peace, freedom is slavery, ignorance is strength.” (ibid)

George Washington University law professor and noted truth-seeking commentator and legal analyst, Jonathan Turley, eviscerates Time’s Charlotte Alter’s arguments for eradicating free speech. Alter argues that “free speech” meant something different when the Framers created the Constitution – that it means something entirely different now. No, Charlotte, “free speech” is an absolute. It either exists or it does not exist.

As Turley states, “free speech is a basic human right” not limited to the First Amendment. Those who seek to limit or eradicate free speech look to exert full political and Governmental control over the populace. Dismantling the right to unfettered self-expression is the lynchpin of the transition from a democratic political system to totalitarianism. Anti-free speech advocates thereby are endorsing Rule of Man over Rule of Law.

I highly recommend reading Turley’s essay carefully: Time Columnist Denounces Free Speech as a White Man’s “Obsession”

Unfortunately the voices like Turley’s will be drowned and cremated. Life is short and it goes quickly. Cherish what little freedoms that remain – they’re not going to last much longer. It’s too late for me to un-take the red pill and in its place swallow the blue pill. And I suspect that eventually blogs like mine will be blocked from the internet.

Is The Gold, Silver And Mining Stocks Bull Run Over?

Short answer – no – next leg higher could be spectacular:

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Love the Weakness When It Comes—and Buy More – Sprott Money Monthly Wrap-Up:


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Many of the junior exploration/development companies I cover, recommend and invest in have the potential to 5-10 baggers from their current down-trodden level. You can learn more about my newsletter here:  Mining Stock Journal information.  I do not take compensation of any type from mining companies and I have been doing my own research in the sector for over 20 years.

The Reintegration Of Gold And Silver Into The Global Monetary System

“Paper money eventually returns to its intrinsic value — zero.” – Voltaire.

The public is going to get a painful lesson about the difference between fiat currency and real money, where “real money” is defined as physical gold and silver. The western world is focused on Putin’s invasion of Ukraine. Little understood, but more profound in its consequences for the west, is the move by Putin to reintegrate gold (and silver) and other hard asset commodities into the global monetary system.

Andrew Maguire and Shane Morand (Kinesis Money) invited me back onto their podcast to discuss the ramifications of Russia’s pegging the Ruble to gold, and the possible emergence of a new monetary system:

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Many of the junior exploration/development companies I cover, recommend and invest in have the potential to 5-10 baggers from their current down-trodden level. You can learn more about my newsletter here:  Mining Stock Journal information.  I do not take compensation of any type from mining companies and I have been doing my own research in the sector for over 20 years.

Gamestop $GME: The Return Of Meme Stock Idiocy

Meme stock mania is back in full idiocy. And it’s time again to revisit $GME as a short. On March 14th, GME closed at $$78, its lowest level in February 23, 2021. The stock had been down nearly 75% since June 9, 2021. But after the market closed on March 21st, GME Chairman Ryan Cohen, announced that he bought 100,000 shares in the open market, taking his ownership stake to 11.9%. This drove the stock price from $94 to as high as $189 by March 28th.

Then after the market closed on March 31st, GME announced its intent to do a stock-split. The stock jumped after hours from its closing price that day of $165 to as high as $203. It opened at $189 Friday and sold off steadily during the day to as low as $155, before closing at $163. Note: GME is doing a “stock dividend” rather than a stock split. While there’s GAAP accounting differences with respect to the shareholders equity accounting, for practical purposes there’s no difference.

There’s a lot to unpack there, not the least of which is the fact that the entire two-event sequence reeks of intentional stock price manipulation. Cohen clearly understands that the announcement of both his share purchase and the stock split would cause the Wall St Bets Reddit meme-chasing “apes” to stampede into the stock and OTM call options. This is an explosive combination given that the share float of GME is just 62.48mm shares and short-interest is close 20%. Cohen announced his share purchase just nine days ahead of the stock-split announcement. Of course he knew ahead of his stock purchase that his next move would be to announce the stock-split.

This is “stock manipulation” 101. Unfortunately, we live in an era in which the regulators look the other way. Many of them indirectly benefit in that they previously worked at Wall Street firms and maintain equity in their former banks. As an example, SEC Chairman, Gary Gensler, was at one time in the running to become CEO of Goldman Sachs.

In early March, Cohen announced that he had a 9.8% stake in Bed Bath and Beyond, another Reddit meme stock that loses $100’s of millions on an operating basis. That announcement drove the stock from $16 to has high as $30. BBBY closed at $22.84 on Friday. As with GME, BBBY has a small share float, with a 21% short interest plus a rabid meme stock following that boasts about its ability to create short-squeezes in stocks with high short-interest and a small float. It would be naive to believe that Cohen is not exploiting this dynamic.

Does investing in GME make sense from a fundamental standpoint? Zerohedge referenced the stock purchase/stock split combo maneuver as “a brilliant ruse by the management team which is far more focused on financial engineering and how to create stock squeezes than actually running the mostly worthless company.”

Cohen made his fortune as the co-founder of the online pet store, Chewy Inc. $CHWY has never been profitable. He took his stake in GME in November 2020, seeking to transform GME from a brick/mortar-store based retail business into an e-commerce operation. Here’s the operating performance of the business over the last three years (GME released its FY 2021 Q4/full-year on March 17th:

Revenue fell in 2020 because of the virus crisis and related lock-down, which affected all brick/ mortar businesses. But 2021 revenues were still 7% below 2019. For Q4 (not shown), revenues increased slightly over Q4/2020, but the gross profit plunged 15.6% and an $18.8 million operating profit in 2020 swung to $166 million operating loss in Q4/2021.

From the pattern in the Company’s operating losses, it would appear that operating losses vary with revenues – i.e. this business does not have economies of scale. The gross margin in 2019 was 29.1%. It fell over the next two years down to 22.4%. In 2021, the operations (from the statement of cash flows) burned $434 million in cash. As for the plan to shutter the brick/mortar stores, the Company closed down just 5% of its store base in 2021.

The sizzle in the gaming business is with the software. 53% of GME’s revenues in 2021 came from selling gaming hardware and accessories. This is a low-margin business. In 2020 hardware was 49% of sales and it was 42% of sales in 2019. It would appear that software sales as a percentage of revenues is going the wrong way. This explains why the gross margin is declining precipitously.

In 2021 the Company took advantage of the meme-stock driven short-squeeze operation and raised $1.6 billion selling shares. It used some of the cash to pay off debt that was due in 2021 and 2023. The Company has $1.27 billion in cash, which is the only valuable asset on its balance sheet. But against this, there’s $1.35 billion in current liabilities (accounts payable, accrued liabilities, operating lease payables). This Company is technically insolvent. I would be surprised if the Company does not take advantage of the share price run-up and unload even more shares on the market.

Bottom line: This is a business that is slowly withering away. Ryan Cohen, whose Chewy online pet store has never made money, apparently believes he can transition GME’s business into a more software-focused e-commerce business model. Good luck. The gaming software business is extremely competitive. Regardless, I strongly believe that Cohen’s primary motive with GME is financial engineering and stock price manipulation. There’s ways for Cohen to monetize some of his shareholdings without directly selling shares in the open market.

GME’s market cap as of Friday’s close is $12.5 billion. It’s a non-nonsensical market cap for a business with serial operating losses, declining gross margins and stagnating to declining sales. Plus the fact that it is technically insolvent. The stock split/dividend will increase the number of authorized shares from 300 million to a billion. The annual shareholder meeting will likely occur in June (June 9th last year), which means the stock split will likely occur in mid-June. The additional shares outstanding should alleviate the susceptibility of the stock to short-squeezes.

A year ago the Street forecast for GME was to earn $1.30/share this year (2022). Now the Street is forecasting a loss of $4.17/share for this year and $3.00/share loss for 2023.

I believe over the next few months, especially if/when the bear market decline resumes, GME will minimally retrace back to the $80 level, where it was trading before Cohen restarted his stock manipulation schemes. The stock is hard to borrow right now but that status will change after the stock split. The good news is that, while implied volatility in the options is north of 100%, it’s half of what it was when I was presenting GME as a short in late 2020.

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The above commentary on $GME is an excerpt from my latest Short Seller’s Journal – I’ve hit several home runs over the last year, including $DKNG, $HOOD, $Z and $NAIL. There’s still a lot of money to be had on the short side before the stock bubble fully deflates…

Did Russia Intentionally Trigger A Monetary System Reset?

“We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.” – Zoltan Pozsar, Bretton Woods III

Fiat currency is a “promise” to repay a debt obligation and nothing more. A hard asset-backed currency is a guarantee that repayment will occur.

On March 7th Zoltan Pozsar, who formerly worked at the NY Fed, was an advisor at the U.S. Treasury and currently is a strategist as Credit Suisse, published a research report titled “Bretton Woods III.” Anyone familiar with the Bretton Woods agreement understands the reference. Nixon’s snipping of the final thread connecting currency to gold is considered to be Bretton Woods II. Pozsar makes the case that Bretton Woods III is a reversion back to a monetary system in which currency is backed by commodities as opposed to being backed by a sovereign issuer’s “full faith and credit.”

A crisis is unfolding.  A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves. – ibid

The post-1971 fiat currency reserve banking system enabled by the removal of gold from the monetary system is nothing more than a Ponzi scheme. “Inside money” refers to the interbank repo/lending mechanism from which the fractional bank reserve monetary system blossoms. Pozsar distinguishes “inside money” from “outside money.” “Inside money” is created by the Central Bank/inter-bank lending mechanism that can magically turn one dollar of reserve capital in to nine dollars of “credit” capital. And the one dollar of reserve capital is backed by nothing tangible – just the “full faith and credit” of the issuing entity.

Think of this monetary system as an inverted pyramid – eg something like Exter’s Pyramid.  In bankruptcy law, “full faith and credit” would be considered, at best, an unsecured loan.  Get in line and pray that there’s value left over to be distributed to the unsecureds.

In contrast, Pozsar references Bretton Woods III as the “rising allure of outside money over inside money,” where “outside money” is “commodities collateral,” meaning tangible assets for which definitive value can be determined, as opposed to the sovereign promise of “full faith and credit.”  In periods of banking crises, banks are reluctant to participate in the “inside game” (see 2008 and September 2019, for instance) because, at that point in time, they don’t trust the fiat currency collateral on which the fractional reserve banking system is predicated and thus are reluctant to lend money to their banking peers. Every time this occurs, the Central Banks have to print more money to “lubricate” the system enough so that it functions. This in turn further devalues the “inside money” on which the system is predicated.

But if currency issued by Governments and printed by Central Banks is backed by hard assets, this problem is avoided. In this system, the counterparty to trade or financing transactions would have the option of demanding payment in the hard asset or assets backing the currency – most likely gold or possibly a pre-agreed upon commodity asset. Remember, fiat currency is nothing more than an unsecured debt instrument of the issuing entity.

It’s likely that Putin knew ahead of time that the west’s response to Russia’s invasion of Ukraine would be to freeze Russian currency reserves held at western Central Banks. Of course, this response by the U.S./west brought to light the inherent Achilles’ Heel of the modern Central Bank fiat currency reserve system. Any country that keeps currency reserves for trade settlement purposes at foreign Central Banks, specifically the Federal Reserve and the ECB, is at risk of having those reserves confiscated, thereby rendering them worthless.

In response, Russia is now demanding payment for energy in either rubles or gold from what it deems to be “unfriendly” countries. Whereas in the “inside money” banking system, settlement of trade is merely a matter of accounting ledger adjustments at the respective Central Banks, in this trade settlement arrangement, a country purchasing oil or gas from Russia in exchange for gold would need to 1) demonstrate that the gold being used for trade payment actually exists and 2) transfer the ownership rights to Russia. Russia ultimately would likely demand repatriation of the gold. The U.S./G7 made it crystal clear that possession of assets is 100% of the law.

The response by the west – led by the U.S. and its control of the global reserve currency – in all likelihood has triggered a reset of the global monetary system. I actually do not like the term “Bretton Woods III” because it references an agreement which, in its essence, destroyed the gold-backed global monetary system. Regardless, it appears for now that Russia – likely with China’s tacit support – has set in motion a global monetary system reset. In the new system countries which supply the world with goods that have price inelasticity of demand – oil, natural gas and food commodities, for instance – will have the power to enforce trade settlement in hard currencies – e.g. gold or other hard assets – rather than fiat currency Central Bank accounting ledger adjustments. This is the nature of the monetary system reset that has been triggered. Welcome to Galt’s Gulch…

“Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half property, half-loot…

…Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.'” – Francisco’s Money Speech, Atlas Shrugged