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Ron Paul See other Ron Paul Articles Title: Russia Threatens the Dollar Standard Who knows why we were awake so early. But the email hit our inbox at 4:13 a.m. and immediately grabbed our attention. "De-Dollarization: Russia Is on the Verge of Dealing a Massive Blow to the Petrodollar," read the headline. Inside, blogger Michael Snyder explained the next chapter in the ongoing financial war between Russia and the U.S. Synder's facts came courtesy of the Voice of Russia -- a Russian news outlet that reported the following: "According to the Prime news agency, on April 24, the government organized a special meeting dedicated to finding a solution for getting rid of the U.S. dollar in Russian export operations. Top-level experts from the energy sector, banks and governmental agencies were summoned, and a number of measures were proposed as a response for American sanctions against Russia. "The 'de-dollarization meeting' was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar." The timing could not be stranger. At the end of April, right as the U.S. imposed sanctions on Russia, we speculated that Russia would retaliate. We made the observation only because we've been immersed in Jim Rickards' new book, The Death of Money. Russia's announcement of intent to drop the dollar from its energy export deals reads like a page straight from the book. Rickards, for his part, was here at Daily Reckoning HQ yesterday to explain the vulnerable state of the dollar. More on that in just a second. The other reason Russia's announcement was eerily timed is because Addison just put the finishing touches on his latest Apogee Advisory issue, in which he explores the end of the petrodollar (to access it, click here). If the term is unfamiliar to you, here's how Rickards explained it to us: "In the mid-1970s, there was a very famous deal, if you will, struck between Henry Kissinger -- who was President Nixon's and, later, President Ford's leading national security adviser and secretary of state -- and the Saudi king. In this deal, they said that Saudis agreed to price oil in dollars. "They didn't have to do that. They could have said, 'We'll take gold.' There were other currencies at that time -- the deutsche mark and the French franc and the Japanese yen. But they said, 'We will only take dollars for oil.' That puts a prop under the dollar. "The United States agreed to a guarantee on national security to protect the Saudis. We made good on that guarantee in 1991, when Saddam Hussein invaded Kuwait and threatened Saudi Arabia -- the U.S. did respond to that forcefully." Now he sees that agreement torn to pieces… particularly after President Obama backed down from bombing Syria and sat down at the negotiating table with Iran -- two things the Saudis disapprove of. But as he mentioned to us yesterday -- though there are plenty of potential triggers that could set off the death of the dollar, that doesn't mean any one of them has to be the trigger. If Russia were to actually stop using the dollar for its energy exports, perhaps it would be the straw that broke the greenback's back. Next Tuesday, Putin is set to meet with China's president. Maybe they'll make such an agreement among themselves then. Maybe not. Either way, it's irrelevant for you as an investor. "You could throw a lit match into a forest and you might start a massive fire," Rickards told us over dinner last night. "But just as easily, you could light a match and throw it in the woods and it could fizzle out without spreading at all." His point was that the specific trigger is unimportant. Simply realizing that the dollar is doomed is foresight enough -- now you have to take preparations. In The Death of Money, Rickards likes a certain gold allocation in a certain form -- but he has other very specific investment recommendations to protect yourself when the dollar meets its demise. As far as he's concerned about gold, writing last month in his local paper, The Darien Times, Rickards explained, "Gold is not digital, cannot be wiped out by hackers and is immune to crashing stock markets and bank failures. Russia has increased its gold reserves 70% in the past five years. China has increased its gold reserves over 200% in the same time period. Do they know something you don't?" Poster Comment: The Dollar is on the way out. ;) Post Comment Private Reply Ignore Thread
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