Jim Rickards: The Petro-SDR — World Money Rising
- The Petro-SDR: World Money Rising
by JAMES RICKARDS, http://dailyreckoning.com/
The response to U.S. efforts to cheapen the dollar in 2010 — 2011 was not long in coming. It came from four directions — IMF, Russia, China, and Saudi Arabia. Enter the new world money: Petro-SDR.
Less than a year after Obama’s declaration of a new currency war, the IMF released a paper that is a blueprint for implementation of a new global reserve currency called the Special Drawing Right (SDR), or world money.
On December 1, 2015, the IMF announced that the Chinese yuan would be included in the basket of currencies used to determine the value of one SDR. With China onboard, the SDR is poised to become the de facto global reserve currency.
China’s and Russia’s immediate response to the coming dollar collapse and rise of the SDR is to buy gold. (It’s not yet possible to diversify heavily into SDR denominated assets because there are very few SDR assets available.) Russia has acquired over 1,000 tons of gold in the past seven years, and China has acquired over 3,000 tons of gold in the same time.
Combined Russian and Chinese gold purchases are over 10% of all the official gold in the world. China has also acquired billions of SDRs in secret secondary market transactions brokered by the IMF.
Saudi Arabia’s response has been more subtle, but may be more dramatic in the end. Relations between Saudi Arabia and the U.S. have deteriorated sharply over the course of the Obama administration. The primary cause was the Iran-U.S. nuclear negotiations and what amounts to the U.S. recognizing Iran as the leading regional power.
In the past months, the U.S. ended the secrecy surrounding Saudi ownership of U.S. Treasury securities (in place since 1975). The U.S. also released a formerly top secret 28-page section of the 9/11 Commission Report that clearly reveals links between members of the Saudi royal family and the 9/11 hijackers and Al Qaeda.
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