Eric King:  “What do you think about the West's imposing the latest round of sanctions against Russia?”

Kaye:  “This is potentially very gold bullish in the short term because it escalates tensions, which has almost always been positive for precious metals.  But more importantly, I think medium-to-longer-term it accelerates the day when gold goes ‘bid-only.’....

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“It accelerates this process by which U.S. hegemony over the world, which is predicated on the U.S. dollar as the world’s reserve currency, is lost.  All you have to point to are the measures that are quickening now, by which Russia and China accelerate bilateral agreements.  This would also mean that they would be requesting payment from their European customers in euros rather than dollars.

So Russia is retaliating and it isn’t getting the press that these largely meaningless sanctions are receiving, but in my judgment this is far more important for investors.  The loss of reserve currency status has tremendous repercussions, not the least of which is a reset in the price of gold and silver.

Also, Russia already has serious gold reserves but my sources tell me that the Russian gold reserves are understated, and I believe that.  We already know that China’s gold reserves are very seriously understated. One of the implications of what’s occurring, particularly with the saber rattling the U.S. seems to be encouraging between China and Japan, which is also not a very good idea, is forging stronger economic ties economically and politically between Moscow and Beijing. 

This is pretty important because Moscow and Beijing both control sizable militaries, including strong nuclear arsenals.  And to the extent that we have a renewed Russian-Sino partnership, this dramatically changes the geopolitical chessboard.  I think we can bet that the self-interest of those two countries, where they are aligned, are going to be advanced much faster in view of the threats these two countries perceive to their own hegemony.  This is the most glaring error being made by U.S. foreign policy.”

Eric King:  “How much gold do you think Russia has?”

Kaye:  “That’s a very good question.  Let’s just say it is very likely multiples of what they’ve announced officially.  Again, I think KWN readers can understand that Russia understates its reserves for the same reason readers understand that China intentionally understates its reserves.  

Of course one day China will make an announcement that will be a multiple of what they admit to.  I would guess that China will announce that it has something on the order of 4,000 tons of gold, but it’s actually more than that.  But the sources I have in Russia indicate the same thing -- that the true holdings are likely a multiple of what is announced.”

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

IMPORTANT - KWN has many more interviews being released today.

The audio interviews with Felix Zulauf, Michael Pento, James Turk, Victor Sperandeo, Dr. Philipa Malmgren, Grant Williams, Dr. Paul Craig Roberts, Bill Fleckenstein, Dr. Marc Faber, Egon von Greyerz, Ben Davies and Art Cashin are available now. Other recent KWN interviews include Eric Sprott and Jim Grant -- to listen CLICK HERE.

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© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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