Transacting in gold can be a nifty way around the US’s financial sanctions. From James Rickards at dailyreckoning.com:
As you probably know by now, President Trump backed out of the nuclear deal with Iran and is re-imposing harsh sanctions.
And just this morning, Trump announced that he’s canceling the much-anticipated nuclear summit with North Korean leader Kim Jong Un because of Kim’s recent belligerent comments.
What does that mean, aside from the added geopolitical risk to markets?
As you’re about to see, you can now expect what I call the “Axis of Gold” to get even stronger. And it has potential to accelerate the demise of the dollar-based international system.
The Axis of Gold includes Russia, China, Iran and Turkey. I would also include North Korea in that list, although as a junior member.
These countries are forming a trading and financial network revolving around gold and are acquiring massive amounts of physical gold to support it. They are steadily moving toward a gold-based balance of payment system.
Why is this happening?
Well, if you’re on the receiving end of American sanctions like Russia, Iran or North Korea, you want a way to work around these sanctions. And gold is a powerful alternative.
Let’s first consider North Korea.
With the summit called off, there’s every reason to expect that North Korea will only intensify its nuclear program.
But how can North Korea obtain the foreign nuclear and missile technology it requires to advance its program?
By using gold.
If a rogue state wants to acquire ballistic missile components or equipment to enrich uranium, it can’t buy them through SWIFT, the international payment system. But it can use gold.
Gold can’t be hacked or traced. Unlike digital money in bank accounts, it can’t be frozen. You just put it on a plane or ship and send it to its destination.
And new U.S. sanctions will once again lock Iran outside of the international payment system. But Iran does a lot of business with Russia and China. That’s where gold comes in.
To continue reading: The “Axis of Gold” Just Got Stronger