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Elliott Wave Trading

Putin: Czar Of Natural Gas, Crude Oil, Uranium & GOLD

Commodities / Gold and Silver 2015 Apr 29, 2015 - 09:51 PM GMT

By: I_M_Vronsky

Commodities

Well-known Moscow journalist Dmitry Kalinichenko expressed it well:  “Very few people understand what Putin is doing at the moment. And almost no one understands what he will do in the future.  No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold.”

Nonetheless, the above comments provide valuable insights into what President Putin’s plan is most likely to be…and how it will eventually and materially benefit the Russian economy.


Russian Gold Reserves Tripled

Russia more than tripled its gold hoard since 2005 and holds the most since at least 1993, IMF data show. The country is boosting Central Bank reserves to diversify foreign reserves with a view to resolving issues related to ruble liquidity, central bank Governor Elvira Nabiullina said in February.

Additionally, Kazakhstan’s gold hoard jumped 33 percent in the past 12 months, data compiled by Bloomberg show.  Kazakhstan is an ally of Russia…and is a former member of the Soviet Union (U.S.S.R).

This begs the mind-boggling question:  What is shrewd Putin’s covert objective…and what does he stealthy have up his sleeve? 

The following facts may shed light on where sagacious leader Putin is guiding his country.  To understand where the astute Putin is coming from, one must know that today Mother Russia is #1 in Natural Gas Production, #1 in Crude Oil Production, #1 in Uranium Production…and #2 in GOLD Production…WORLDWIDE!

Natural Gas Production (Russia plus ally Uzbekistan make it the world’s #1 Gas Producer)

Source:  http://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_production

Crude Oil Production (Russia is the world’s #1 Crude Oil Producer)

Summary

As the world’s largest oil producer, Russia accounts for 12 percent of global petroleum output. Last year it again surpassed Saudi Arabia by pumping almost 10.4 million barrels per day (BPD). It is also one of the world’s largest exporters of oil, with nearly 5 million BPD. Moreover, with the world’s largest proven reserves of natural gas, Russia is also the top producer of natural gas, accounting for about 20 percent of the world’s total supply.

To be sure crafty Putin believes the very foundation of Russian economic growth depends on the extraction, processing and exploitation of its mineral raw resources. He is oft quoted as saying: “This is the key to Russia’s becoming a great economic power.” Effectively, the Russian economy is greatly dependent on the production of energy (i.e. Crude Oil and Natural Gas…not to mention URANIUM).

Uranium Production By Country (Russia is the world’s #1 Uranium Producer)

Take particular note Kazakhstan and Uzbekistan are Russian Allies and former members of the U.S.S.R.  Together they produce 28,000 tonnes of Uranium per year, which is three times the yearly amount of the #2 producer Canada – and nearly 16 times the yearly production of the US. Literally, Russia and allies dominate the global Uranium market.

Source:  http://en.wikipedia.org/wiki/List_of_countries_by_uranium_production

Kazakhstan was the last of the Soviet republics to declare independence following the dissolution of the Soviet Union in 1991; the current President, Nursultan Nazarbayev, has been leader of the country since then. Kazakhstan pursues a balanced foreign policy and works to develop its economy, especially its dominant hydrocarbon industry.

Kazakhstan is a bilingual country: the Kazakh language, spoken by 64.4% of the population, has the status of the "state" language, while Russian, which is spoken by almost all Kazakhstanis, is declared the "official" language, and is used routinely in business.

In 1991 Uzbekistan emerged as a sovereign country after more than a century of Russian rule - first as part of the Russian Empire and then as a component of the Soviet Union.   The country's official language is Uzbek, a Turkic language spoken natively by approximately 85% of the population. However, the Russian language remains in widespread use especially in business matters.

Last, But Certainly Not Least Is Russia’s Last Pillar Of Economic Strength is GOLD.  In 2014 Russia ranked second in annual gold production worldwide per GFMS (one of the world's leading economics consultants in precious metals, specializing in research into the global gold, silver, platinum, palladium, and copper markets).

Top 10 World Gold Producing Countries 2013/2014 (tonnes) 

Source: GFMS

Central Bank Gold Reserves By Country

According to global analyst Michael Lombardi, “Between the first quarter of 2009 and the third quarter of 2014, Russia’s gold reserves soared 116%, from 531.87 tonnes to 1,149.80 tonnes. Gold currently accounts for 9.9% of the country’s foreign reserves. Why the sudden love for gold? Some see it as a sign the country is reducing its dependence on the U.S. dollar and the euro.”

Russia’s Central Bank Gold Buying Spree Since 2001 has allowed its gold hoard to more than triple from 400 tonnes to 1,238 tonnes. No other country is accumulating gold this fast.

In part the Central Bank of Russia has financed the gold purchases by methodically selling its stash of US Treasuries.  The chart below clearly demonstrates unambiguously that Russia began its de-dollarization efforts before it was hit with Western sanctions. Moreover, Russia’s US T-Bond dumping activities is picking up steam.

According to Casey Research, “The message is clear, and it’s one that we accurately detected years ago and have monitored since: by offloading treasuries and loading up on gold, Russia is making an all-in bet against the US dollar, in favor of the yellow metal. Concurrently, it’s playing an active role, along with the likes of China, Iran, and Kazakhstan, in the expanding international movement to bypass the dollar’s use in trade settlement via the employment of currency swaps and other measures.”

Putin Is Going For The Gold…LITERALLY

Calculating President Putin’s specific objective is to pave the way for the US dollar to diminish in value -- and eventually relinquish the greenback’s role as the ultimate means of international payments and asset accumulation, yielding both of those roles to another recognized, denationalized and depoliticized monetary asset – GOLD! This daunting goal will take time and inexorable persistence to achieve.  In this rapidly evolving Monetary War against the West, the Axis affiliation of Moscow and Beijing is welded together with GOLD.  Consequently, a rising gold price is a sine qua non goal of both Moscow and Beijing.

The ammunition of this Monetary War takes the form of Oil, Gas, Uranium and GOLD.  And Russia controls the Arsenal of these Monetary Weapons.  Here are Russia’s production ranking of each vis-à-vis the rest of the world:

Crude Oil…………..#1 worldwide

Natural Gas………..#1 worldwide

Uranium…………….#1 worldwide (with the help of allies Kazakhstan and Uzbekistan)

GOLD………………#2 worldwide (but moving up fast to vie with #1 China)

Without fear of exaggeration, one is forced to recognize the West must prepare for a commercial world NO LONGER dominated by the US Dollar. And this will translate to much higher commodity values across the board…especially for Crude Oil, Natural Gas, Uranium and GOLD.  Moreover, a collateral economic benefit will be a sharp reduction in UNEMPLOYMENT in those nations that produce these commodities.

In the opinion of Mike Whitney of Emerging Equity, “Putin is doing whatever he can to circumvent dollar-denominated business and financial transactions. The move away from the buck is a direct attack on the US’s greatest source of power, the ability to control the de facto international currency and to require that other nation’s stockpile dollars for their energy purchases which are then recycled into US financial assets, stocks bonds and US Treasuries. This petrodollar-recycling biased-program allows the US to run gigantic current account deficits without raising interest rates or reducing government spending. Putin’s anti-dollar policies could diminish the greenback’s role as reserve currency and put an end to a system that institutionalizes looting.”  Full Report is “Oil Price Blowback: Is Putin Creating A New World Order?” 

An additional benefit accruing to China will be for its Renminbi (yuan) to replace the greenback as the World’s Foreign Reserve currency.  In fact there are rumors from reliable sources that Beijing plans to eventually back the Renminbi with gold…A Chinese Gold Standard if you will.

Overt Evidence Many Nations Support President Putin’s Endeavour To Lower the US$ Value

It is NO SECRET many Central Banks recently have been aggressively accumulating gold deposits. 

Central Bank Gold Buying Soars To Near A 50-Year High…in anticipation of a higher gold price .

See:  Central Bank Gold Buying Soars To Near A 50-Year High

During 2014, country Central Banks bought 477 tonnes…close to a 50-year high…and that’s equivalent enough to buy 75 Boeing Dreamliners planes. This is at once astounding as well as revealing…in light of a slowly dropping gold price since late 2011.   

Russia was by far the largest buyer of the yellow metal. Its purchases made up a staggering 36% of total Central Bank buying. In total, Central Banks bought 477 tonnes of the precious metal last year of which 173 tonnes flowed into Russia, according to a report from the World Gold Council.

Official Gold Reserves Accumulation Of Emerging Countries Since 2000

Conclusion

In view of Russian President Putin’s tenacious efforts to achieve a worthy goal (with likely coordination of ex-Soviet States), the value of the US Dollar will soon begin to fall. Ergo, the price of gold, Natural Gas, Crude Oil and Uranium will again rise to record high levels. Consequently, President Putin will become the equivalent of global Czar of Natural Gas, Crude Oil, Uranium and GOLD. 

Russia’s Natural Resources Are Down Substantially From Their Past All-Time Highs

  • Natural Gas is down 83% from its 2006 record high of $15.37
  • Crude Oil is down 61% from its 2008 record high of $147.00
  • Uranium is down 71% from its 2007 record high of $136.22
  • Gold is down 39% from its 2011 record high of $1,923

Obviously, there is tremendous upside appreciation potential for most commodities when the US Dollar begins to fall. And it is NOT a matter of IF…but rather WHEN the greenback will again decline.

Spot On President Putin…as you are right on the money (pun intended)!  Indubitably, monetary crusader Putin is unstoppable in his quest to lower the value of the US dollar…and thus increase the value of Russia’s primary raw material commodities (Natural Gas, Crude Oil, Uranium and GOLD).

Related Articles:

The Political Economy of Russian Oil and Gas

Central Bank Gold Buying Soars To Near A 50-Year High

Gold Price History In 16 Major World Currencies During The Past 10 Years

Grandmaster Putin's Golden Trap

Grandmaster Putin’s Gold Trap: Russia Is Selling Oil And Gas In Exchange For Physical Gold

Currency Wars Back As Russia Buys One Million Ounces Of Gold In March

By I. M. Vronsky
Editor & Partner - Gold-Eagle
www.gold-eagle.com

Founder of GOLD-EAGLE in January 1997. Vronsky has over 40 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a Financial Analyst with White Weld.  He believes gold and silver will soon be recognized as legal tender in all 50 US states (Utah and Arizona having already passed laws to that effect). Vronsky speaks three languages with indifference:   English, Spanish and Brazilian Portuguese.  His education includes university degrees in Engineering, Liberal Arts and an MBA in International Business Administration – qualifying as Phi Beta Kappa for high scholastic achievement in all three.

© 2014 Copyright I. M. Vronsky - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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