Dear Money & Crisis Reader,
Buying physical gold is one of the few ways to protect your wealth against a catastrophic financial crisis.
But savvy investors aren’t the only ones buying gold right now.
In an effort to undermine the U.S. dollar, an alliance of America’s rivals are stockpiling massive reserves of the precious metal.
In fact, according to financial expert Jim Rickards, they’re buying so much gold, it’s going to create “enormous demand”… and potentially drive gold prices through the roof.
Since Jim is one of the world’s foremost authorities on gold, I asked him to guest write today’s letter of Money & Crisis and tell us all about this new Axis of Gold.
All the best,
Editor, Money & Crisis
P.S. Jim is one of the brains behind many of the financial strategies you read in Money & Crisis and the bestselling author of Currency Wars.
Right now, Jim is sending readers a FREE copy of his brand-new hardcover book, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis.
This shocking account of the next financial crisis reveals one of the biggest threats to your wealth today… and shows you the simple steps you can take to protect your money and your family. Claim your FREE copy now.
The Axis of Gold Will Drive Gold Higher by the End of 2018
By Jim Rickards
A major blind spot in U.S. strategic economic doctrine is the increasing use of physical gold by China, Russia, Iran, Turkey and others — both to avoid the impact of U.S. sanctions and create an offensive counterweight to U.S. dominance of dollar payment systems.
This is the Axis of Gold.
Gold offers adversaries significant defenses against these dollar-based sanctions.
It’s physical — not digital — so it can’t be hacked or frozen. And it’s easy to transport by air to settle balance of payments or other transactions between nations.
Gold flows cannot be interdicted at SWIFT, the international payment system. And it’s non-traceable, so its origin cannot be ascertained.
The Dragon’s Hoard
We have a lot of data to support the claim that the Axis of Gold exists and is gaining strength.
We know that for example, Russia has tripled its gold reserves in the last ten years. It’s gone from about 600 tons to over 1800 tons of physical gold, and is moving very quickly towards 2,000 tons.
That’s an enormous amount of gold. Just one ton of gold is valued at over $37 million at today’s prices.
China is also amassing physical gold at an astounding rate. Like Russia, it has tripled its gold reserves, officially from 600 tons to 1,800 tons.
But we have good reason to believe China actually has a lot more gold than that.
China might actually own up to 4,000 tons of physical gold. We don’t know the exact number because China is highly secretive about its gold acquisitions. But that’s a reasonable estimate.
China is also the world’s largest gold producer with mining output of about 450 tons per year.
Iran also has an enormous amount of gold. Iran received billions of dollars in gold from the Obama administration as bribes to limit Iran’s nuclear weapons program.
We don’t have any insight into how much it has because it’s also highly nontransparent. But in the first quarter of 2018, Iranian gold bar and coin purchases more than tripled.
Turkey is also acquiring enormous amounts of gold, which should not be surprising given Turkish president Recep Erdogan’s recent comments questioning the role of the dollar in global trade.
The Turkish central bank has almost doubled its gold holdings since last May, according to the World Gold Council. And it was the second largest buyer of gold among central banks for the first quarter of 2018.
The evidence for this Axis of Gold is overwhelming.
I have contacts in the national security industry community who have, in their own roundabout way, been able to confirm that to me, so it’s very clear that’s what’s happening.
I’ve warned the Pentagon and the Treasury Department about this threat for years. But the message has yet to sink in. The U.S. is still unprepared for this coming strategic alternative to dollar dominance.
Trump’s sanctions on Iran are a double-whammy.
On the one hand, they impede global trade and growth; especially in Europe where growth was already slowing down before the sanctions. On the other hand, the Axis of Gold will create enormous demand for physical gold as an alternative to dollar payments vulnerable to U.S. sanctions.
At the same time, the Axis of Gold creates huge embedded demand for gold as the Axis nations build out an alternative to the dollar payments system.
But even though the Axis of Gold is creating huge embedded demand for gold, gold mining output is flat and the western central bank sales of gold have ceased.
With limited output, limited western sales, and huge eastern purchases, it’s only a matter of time before a link in the physical gold delivery chain snaps and a full-scale buying panic erupts.
Then the price of gold will soar.
The next few months could still be a bumpy ride for gold, but late summer and fall look promising for a push to $1,400 per ounce or higher.
The recent drawdown in gold prices should be seen for what it is, a temporary reversal in a new bull market. The current gold price of about $1,300 per ounce is a classic “buy-the-dips” opportunity that won’t come again soon.
But before long it may be too late for investors to benefit because the ready supply of physical gold will be gone. The time to take a position is now.
The days of dollar dominance are numbered. The process won’t happen overnight, but the signs all point in one direction.
Editor’s note: Click here to read more of Jim’s expert analysis and claim your FREE hardback copy of his new book.