World Out Of Whack: Ruskies, Sanctions, And Bitcoin – Coincidence?

World Out Of Whack: Ruskies, Sanctions, And Bitcoin – Coincidence?

Hands up if you’ve got kids.

This is how it works. And tell me I’m wrong.

Your progeny sees something, wants it, and whines asks for it. Could be an ice-cream, a fluffy toy, or that juicy sandwich you just prepared. Sometimes they get it, often they don’t. Time progresses and your tolerance regresses.

“Daddy, I want….”


“But you don’t know what I want.”

“The answer’s still no.”

It’s as automatic as your knee flex when Dr. Sergei brings out his little rubber hammer and pops you on the knee. Boing. No!

Automatic responses come from habit, and habit is, at least initially, a function of risk and reward.

This is bureaucracy in a nutshell.

Let me explain…

Take Mikhail, a middle aged bureaucrat, who, through a combination of lack of foresight and time working for the beast, has had all the life and common sense sucked right out of him. Innovation and risk are as foreign to Mikhail as sushi to a Masai warrior.

Mikhails job pays him to tick boxes and ensure all boxes are ticked. Mess it up and he gets a pink slip, the money for his kids’ university, and wife’s shoe fetish stops flowing. Risk. Pain.

Along comes Ivan with something out of the box. A new business, in a new industry. It doesn’t even fit in any of Mikhail’s boxes. Risk. Pain.

Dr. Sergei’s hammer. Boing. No!

Ever wondered why countries with high levels of bureaucracy never have much innovation?

Think about it..

If Mikhail says yes and it works out, Ivan gets a yacht and Mikhail gets to keep his pension. If he says no, he still gets his pension. If, on the other hand, Mikhail says yes and it fails with the finger pointing going to him, he risks losing that pension. What would you do?

It’s all risk, no reward for Mikhail.

So along comes Bitcoin, and governments (not just the Ruskies) initially banned it.

The Problem with Bitcoin

Is that nobody actually asked for permission from Mikhail. Permission wasn’t granted but then it was never needed. A protocol doesn’t give an “isht” about any central authority and can’t be argued with. That’d be like arguing with soil.

When Sophia in Moscow wanted to use Bitcoin, she did. And when Yoshiko in Tokyo wanted to, she did. A government that said no-no, bad, dangerous, scary, only to have the kids go ahead and play in the traffic anyway, looked awfully like a eunuch – impotent.

The about turn notably from both Japan and Russia isn’t because the paper pushers suddenly took a swig from the innovation and risk bottle but because they’re largely powerless to stop it.

Providing Authority After the Fact

Imagine your snotty little kid Johnny, rather than asking you for something, simply goes ahead and takes it.

Imagine further that there was absolutely nothing you could do to stop him. Would it not, at least ostensibly, be far easier to turn around and just say, “Oh no, it’s OK. Johnny Snotnose has my blessing.”

After all, suggesting it’s not sanctioned would reveal a weakness, especially if you couldn’t bring out the cane for Johnny.

Weakness, as mentioned last week, is anathema to leaders who rule with fear.

And so it is that last month, at the St. Petersburg Economic Forum, Vlad met with Vitalik Buterin, developer of Ethereum, where reportedly the Russian President viewed the technology as a “promising tool to assist Russia in diversifying its economy beyond oil and gas”. According to a statement on the Kremlin’s website, Putin said:

“The digital economy isn’t a separate industry, it’s essentially the foundation for creating brand new business models.”

Now, before you sing with the choir of libertarians thinking Vlad just joined the ranks, just remember that along with all bureaucrats everywhere they will want their slice of the pie – a topic I discussed just the other day.


Far from banning Bitcoin and crypto currencies, Russia is now, via a politically connected (hey, this is Russia) oligarch, raising US$100m to mine crypto currencies.

Here’s a question for you: What does Russia have a lot of?

Vodka? Yes. Brides online? Yes. But get your head out of the gutter, what else?

Energy, very cheap energy.

Mining cryptos requires cheap energy, something Russia has a helluva lot of.Click To Tweet

Sure, there are other countries out there with cheap energy such as Saudi Arabia, but the problem with the Middle East… actually there are a lot of problems with the Middle East, but just one of them is that it’s bloody hot. This matters when you’re running servers, which give of more heat than one of their suicide bombers.

This makes mining farms in hot places an economically tough call. Russia, on the other hand, has both cheap bountiful energy as well as sub-zero temperatures. Perfect for crypto mining. Something you can do while swilling vodka and searching for a bride.

There is more…

Russia’s central depository is building its own crypto currency wallet:

“Russia’s National Settlement Depository (NSD), the central depository for Moscow Exchange, the largest exchange group in Russia, is developing a blockchain platform to provide deposit and settlement services for digital assets and cryptocurrencies.”

These are significant events because they signify that crypto currencies are not only now being taken seriously by business but increasingly by governments.

Enter Geopolitical Tensions

Washington being brilliant just sanctioned Russia and managed to piss of both Vlad and Angela in one fell swoop.

This after accusing Xi of being a naughty boy and now pressuring him to “do something” about young Kim. This is the sort of fragmentation I promised you last year was the future with the incoming “strong men”, and with fragmentation comes a deeper desire to de-risk one’s position.

Tell me, if you were Vlad or Xi sitting on a pile of Benjamins, would you feel more or less comfortable?

Yeah, that’s what I though, too.

Wiley buggers, those Ruskies.


– Chris

“We can ignore reality, but we cannot ignore the consequences of ignoring reality.” — Ayn Rand

Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since “Tricky Dicky”

Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since “Tricky Dicky”

– Gold hedges massive ongoing devaluation of U.S. Dollar
– 46th anniversary of ‘Tricky Dicky’ ending Gold Standard (see video)
– Savings destroyed by currency creation and now negative interest rates
– Long-term inflation figures show gold a hedge against rising cost of fuel, food and cost of living
– $20 food and beverages basket of 1971 cost $120.17 in 2017
– Household items increased by average of 2000% and oil by 5,373% since 1913
– Gold gained 5,669% since 1913; by nearly 3,000% since 1971
– Dollar has been reserve currency of world in the period and most other currencies have seen greater devaluation
– Evidence of gold’s role as inflation and currency devaluation hedge

 Editor: Mark O’Byrne

US dollar Purchasing Power As measured By Gold’
Source: Goldchartsrus

You don’t need ‘Tricky Trump’ to devalue the dollar, it’s been doing that since 1913 and ‘Tricky Dicky’ in 1971

In 2015 President Donald Trump made headlines when he told a town hall event in Atkinson, New Hampshire about how his father had once given him a ‘small loan of a million dollars.’

Outcry swept around the media who asked how much the future President was really in touch with the common voter.

Whilst Trump’s reference to ‘small’ was in relation to the (apparent) size of the empire he subsequently built he may as well have been referring to the value of a million dollars now and how small it is compared to in 1975 when he was lent the money.

$1 million dollars was a lot of currency in 1975. Today it will barely buy you a nice house in a nice city.

Using today’s CPI data Trump Sr’s $1 million loan would today be equivalent to $4.4 million. The purchasing power of a 1975 US dollar has fallen by over 400%. It has fallen a lot more since 1971.

In this week 46 years ago on August 15 1971, President Nixon announced the U.S. Dollar would completely cut ties with sound money gold (see video below).

Without gold backing and gold as a monetary anchor, we can now see just how much the purchasing power of the consumer dollar has declined since 1971.

You can see an even better example of the dollar’s collapse in purchasing power when measured in gold ounces (see charts above).

Prices climb by over 2000% since 1913 and creation of the Fed

‘[Since 1913] the general public and policymakers have focused almost constantly on inflation; they have feared it, bemoaned it, sought it, and even tried to whip it.’ Bureau of Labour Statistics 

In 1970, after many decades of dollar devaluation, Herbert W. Armstrong quoted the Labor Department’s figures for how much $5 would have purchased in 1913:

Click here to read full story on

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Kim Jong-un cold feet? Leader takes wait-and-see posture over Guam attack

Kim Jong-un cold feet? Leader takes wait-and-see posture over Guam attack

North Korean leader Kim Jong-un has been briefed on the military’s plan to fire ballistic missiles near the U.S. territory of Guam, home to key American air and naval bases, Pyongyang’s state media said Tuesday. After examining the plan, the North’s leader said that he would watch Washington’s behavior “a little more,” but it will make…

The Common Sense Way To Get Rid Of Kim Jong-Un

The Common Sense Way To Get Rid Of Kim Jong-Un

That will never happen!

Much to the consternation of the little men in that incestuous, insular, politically inbred, inward looking place called Washington DC, young Kim is firing rockets into the air to much fanfare in his desperately poor paradise.

This week, the UN security council unanimously approved sanctions against the naughty boy north of Seoul. Stupid, stupid (which I’ll come to in a moment)!

In the meantime, more brilliance from Washington:

I’ll hit North Korea with fire and fury, vows Donald Trump

Oy vey! Here we go.

An entire bottle of Kalashnikov vodka laced with Prozac guaranteed to blow your head clean off is required to understand the logic. Hang on while I pour myself a glass.

North Korea poses less danger to the US than a bunch of angry Saudi teenagers with boxcutters and a belief that 72 virgins await them should they kill the infidel.

You know why?

The damage they could do was truly asymmetric relative to the damage their enemy could do.

It’s a topic I discussed recently when suggesting the economics of warfare have changed:

What we’re seeing is power shifting into the hands of individuals or at least small groups as apposed to large groups.

This same dynamic is at work with respect to war.

All wars are won or lost due to either side’s ability to secure supply lines, logistics, transportation, provisions, military hardware, and communications. And the ability to pay for all of them. Just as any business which can’t finance its plans goes belly up so, too, does any army.

Now, imagine an army with the ability to decentralise all of these elements.

This army is actually technologically and economically backward. This doesn’t sound threatening until you realise that:

  • This army can and does utilise the technology and economics of its enemy. No need to develop its own.
  • Transportation is not only provided to them but provided by their enemy.
  • This army benefits from acquiring its transport, provisions, and even military hardware from its enemy.
  • This army uses the communication tools necessary to conduct attacks at fractional cost… tools produced more often than not by its enemy… now out in the public realm

Would this not be a pretty powerful army?

Surely it hasn’t escaped the geniuses at the UN and in that five sided building that houses more wet-lipped psychopaths than a maximum security prison that nuclear weapons can quite easily be delivered by angry Algerian teenagers in oh, I dunno… a car, a truck, a boat, or a private plane.

And being intelligent readers, you’ll well know that there seems no shortage of angry Algerian teenagers quite willing to carry out such a task. Why, oh why build an incredibly expensive missile system to do what can be done easily, at lower cost, and delivered with greater precision to unguarded targets?

The answer is that young Kim needs a show of force to legitimise his very existence to the North Korean people.

The fact he’s recently stepped up his rhetoric should be treated as evidence of domestic pressures on his regime. And this means that there exists an excellent opportunity to bring down his regime… but it’ll absolutely never be used (more on that in a minute).

This brings me back to sanctions…

Those sanctions just provided Kim more fuel to fire up his domestic popularity than he could ever have garnered on his own. His response was precisely what you’d expect of every self-respecting dictator. He barked at them and used it as further evidence of the evil that “his people” must overcome.

The clowns at the UN sipping US$10 water must have said to themselves, “Well, we’ll hit him hard with these sanctions. We’ll deprive his people of goods and services and Kim will cave in and change his tune.”

Why? Because he cares so much for them and can’t stand to see them starve? Really? Are these people that dumb?

Or maybe they think to themselves, “His people will become so fed up with starving they’ll overthrow him”.

This tactic has worked splendidly before. Oh wait! No, wrong! It’s never worked before.

How it is that the inescapable logic and hard evidence defies entry into their cognitive functions requires another glass of Kalashnikov.

Dictators are bullies by nature, and bullies everywhere operate on a platform of fear, intimidation, and a show of resolute strength. Weakness of any sort is as dangerous as any nuclear weapon to them. Why would Kim risk being seen as weak and ineffective when doing so would threaten his very regime?

This would be like the Pope coming out saying, “Sorry folks it’s all a hoax. There is no God.”


Sanctions act only to bolster a dictator’s resolve.Click To Tweet

People starved of resources are by nature less resourceful and actually less trusting of foreign influence – the very thing that those who are bringing the sanctions actually say they want. And so overthrowing him becomes even less of a probability. Well done guys!

Typically, the politics behind such things has less to do with logic than it does money. As I mentioned when discussing Trump and Russia, you can’t take away the rice bowls:

Why Washington and the Establishment Need a Russian Enemy

Without a Russian threat the need for NATO is… well, jeez Louise, there isn’t one. Hmmm.

After all, NATO doesn’t need Eurofighters to deal with angry Algerian teenagers. They were built to do combat with Ivan. What if Ivan isn’t the threat they need him to be?

Europe (and NATO) actually need weapons designed for a knife fight in a cubicle. Nuclear submarines seem like overkill for jihadists donning exploding underwear and yelling “Allahu Akbar” in a Paris subway. You sure as hell can’t fight him with a Mig-29. The problem is, none of this works for the lobbying military contractors sucking at the teat of Washington.

“Scrap the 20 F-22 Raptor jets boys. We’ve got an order for… Oh, jeez… An order for… 45,000 stab vests??… No, that can’t be right.”

Without NATO Lockheed Martin may not build as many ugly and ludicrously expensive planes. Without a Russian enemy Halliburton don’t provide “services”. Rice bowls are at risk. It’s about the money. It’s always about the money.

The Actual Solution

You have to make the distinction between a government and a people. They’re absolutely not the same thing.

Now, if you want to get rid of the North Korean people, then it makes perfect sense to turn North Korea into glass. That’s easy: Conjure up a reason like weapons of mass destruction and then go at it. We all remember Iraq. On the other hand, if your objective is to “liberate” them, the solution is really quite simple.

You immediately eliminate all sanctions and you absolutely let goods, services, and information flow. Immediately open the borders to allow North Koreans visa access to the rest of the world.

The Berlin Wall fell not because those nasty Commies got bombed to smithereens… or because they saw the light and came around to a smarter way of doing things.

No, it fell because information spread. I’d go so far as to say that it was the fax machine which brought down the Berlin Wall.

It sure as hell wasn’t some busybody know it alls in DC or any of the think tanks that litter the halls of power-like plastic bags on the side of an African highway.

If the West completely opened up to North Korea, there would be a greater infiltration of goods and services into North Korea, and this, much like the fax machine, would bring resources and information to the people of the country (remember, without resources it’s tough to displace Kim). More importantly, it would eliminate the ability of Kim to adequately have a terrible foe.

Show me one country with a desperately poor populace that has posed any real threat to the dictator running the show. Now go and read your history books and you’ll find that when a populace develops a middle class status the risks to the regime are much much higher.

This is where China is now, and it’s a balancing act – one, I might add, that China have been managing remarkably well by providing increased economic freedom while limiting political freedom (not unlike Singapore).

The reason the West will not eliminate sanctions is because our Western leaders refuse to allow overwhelming evidence to influence their repeatedly failed policies.

And so here we are…

The risks ratcheting higher everyday, and we know it only takes one stupid move and we’ll have cities in smoking ruins.

It’ll never be “tactical” or short. Forget about what the generals say.

Wars are more unpredictable than an epileptic on a bronco. Take a look at Iraq. It was going to be a cakewalk as was Afghanistan… and Somalia… and Vietnam.


– Chris

“There are very few examples looking back over the last 25 to 30 years where sanctions have actually succeeded”. — Nicholas Burns, former US diplomat

Silver Mining Production Plummets 27% At Top Four Silver Miners

Silver Mining Production Plummets 27% At Top Four Silver Miners

Silver Mining Production Plummets 27% At Top Four Silver Miners

by SRSRocco Report

In an interesting change of events, production at four of the top primary silver miners plummeted during the second quarter of 2017.

This goes well beyond normal fluctuations in mining companies production figures during different quarterly reporting periods. The company with the least percentage decline in silver production still suffered a 20% reduction of mine supply in the second quarter.

According to recently released company data, silver production declined between 20-34% from these four primary silver miners during the second quarter. The company that suffered the biggest decline in silver production was Hecla at -34%, followed by Endeavour Silver at -26%, Silver Standard at -24% and First Majestic with a decrease of 20% (see table above).

Total silver production from these four primary silver miners fell 27%, from 11 million oz (Moz) during Q2 2016, to 8 Moz Q2 2017. We can see the breakdown in the chart below:

The second largest percentage decline in silver production was from Endeavour Silver. Production at Endeavour Silver fell from 1.6 Moz in the second quarter of 2016 to 1.1 Moz in Q2 2017. This 26% decline in silver mine supply was blamed on several factors:

Reduction in capital and exploration expenditures in the beginning of 2016 due to lower silver prices, but the company has increased spending once again in the second half of 2016
narrowing veins, falling ore grades and less ore processing due to a reduced capital expenditures in the beginning of 2016
less access to mine areas as pump failures due to power overloading caused flooding in some portions of the mines
This huge decline in silver production at Endeavour Silver, plus falling earnings, impacted its stock price which fell 16% in one day after the news.

Click here to read full story on

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Africa’s National Government Targets 500,000 Metric Tonnes Cocoa Production By 2021

Africa’s National Government Targets 500,000 Metric Tonnes Cocoa Production By 2021

In efforts to diversify the nation’s economy from the oil to non-oil sectors like agriculture and solid minerals, the Federal Government has set a target of 500,000 metric tonnes (MT) cocoa production and processing by Year 2021. Government is also organising a one week stakeholders’ forum that will bring together over 1,000 Small, Medium Enterprises (SMEs)…