Rickards: Russia Will Invade

Showdown in Ukraine Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Rickards: Russia Will Invade - It’s increasingly likely that Russia will invade Ukraine… - Putin laughs at Biden’s threats… - Then Jim Rickards shows you how Russia is about to teach the U.S. an old lesson about gold… Recommended Link [Attention! Before You Read Any Further…]( Before you read any further in today’s issue, an urgent situation needs your immediate attention. If you don’t plan on [claiming this new upgrade to your Strategic Intelligence subscription]( you’re missing out on a huge opportunity. Right now is your chance to grab one of the biggest (and most valuable) upgrades our company has ever made to a newsletter. I’m taking Strategic Intelligence to an entirely new level and I’d hate to see you left behind. [Click Here To Get In While You Still Can]( Portsmouth, New Hampshire December 21, 2021 [Jim Rickards]Dear Reader, By now it’s becoming increasingly apparent that Russia will invade Ukraine in the near future if Russian demands for Ukrainian neutrality are not met. Whether this happens in the winter of 2022 (when the weather is harsh, but the ground is firm) or in May 2022 (just after the “mud season” in March) is unclear, but the invasion is coming. The Winter Olympics in Beijing may be a factor in favor of a spring invasion. China wants to be the center of the world’s attention and doesn’t want a Russian invasion to distract from its moment in the sun. And Russia doesn’t want to alienate China, a key ally. Now, nothing is written in stone. Circumstances can always change and decisions can be reversed. That’s the basis of all my analysis. I continually update my forecasts to keep up with developments. Having said that, all indications point to a Russian invasion in the relatively near future. Russia is moving up to 175,000 troops to its border with Ukraine including infantry, armor, special forces and air support. That’s about 10 divisions or one corps in the Russian order of battle. The first objective will be strategic. An invasion will seek to secure eastern Ukraine around the provinces of Donetsk and Luhansk, join those provinces with the Russian-controlled Crimean Peninsula and create a secure zone for passage of Russian naval vessels from Crimea through the Bosporus and into the Mediterranean Sea. Another objective will be political. Russia will seek to create internal turmoil in Kiev (the lead city in western Ukraine) and prevent any movement toward Ukraine joining NATO. At that point, Putin can rest. He has no desire to invade Poland or Germany or other parts of Central Europe. Even if he did have the desire, he doesn’t have the capability. The massive Soviet tank armies of the Cold War are long gone. (Tomorrow, Dec. 22, at 1 p.m. Eastern, I’ll be hosting a live event in which I’ll further break down the coming Russian invasion of Ukraine. But that’s not all. I’ll be using a war game-style format to look at 2022 in terms of markets, geopolitics, digital currencies and gold. [Click here now]( to sign up.) Biden could deter a Russian invasion of Ukraine, but he won’t. This was revealed in the recent Biden-Putin summit conference. Biden warned Putin not to invade Ukraine and threatened actions if he did. But Biden’s threats were empty. He said he would send U.S. troops to Western Europe if Putin invaded. But what’s the point of sending troops after the invasion? If you were serious about stopping an attack, you would send the troops now. I’m not condoning the invasion or the troops. I’m just stating the obvious about the timing. Biden also threatened to cut off Russian natural gas exports to Germany through the Nord Stream 2 pipeline. But that’s ridiculous. Russia has ample outlets for its natural gas, but Germany is desperately dependent on those Russian gas exports since Germany has shut down so many coal and nuclear plants. The only loser from a shutdown is our ally Germany, not Russia. Finally, Biden threatened economic sanctions on Russia. But Russia has been under sanctions since 2014 and they have had no impact on Russian behavior. Russia has wisely diversified 21% of its total reserves into physical gold bullion that is immune to freezes, hacks or sanctions. The gold can be used to pay for essential imports or as collateral for loans. Biden’s diplomacy is a failure, and his threats are empty. Get ready for the invasion in the coming months. Smart investors will prepare the same way Russia has — by buying gold. Below, I show you how Russia is about to teach the U.S. an old lesson about gold. Read on. Regards, Jim Rickards for The Daily Reckoning P.S. A war has been quietly raging behind the scenes in America. [Now it may have finally reached the tipping point.]( Will this be Biden’s new legacy as president? I’m 90% certain that it will… and things are about to get very, very ugly… Starting with Ukraine. This story has many levels, and a history that cannot be ignored. That’s why [this Wednesday the 22nd at exactly 1:00 p.m. EST…]( I’m going live on Zoom with a small group of readers to break the story. And I think you need to be there. [Click here to register for my urgent Zoom call]( We are going to cover things like: - Why there’s a 90% chance of Russia invading Ukraine in the coming months (and the implications that has for your portfolio, your investments and your way of life) - The real reason for the headlines about the pandemic and inflation (and what they are designed to cover up) - The silent war that’s been raging in the U.S. for the last 20 years (and why I was asked to join the Pentagon at a top-secret weapons laboratory to help them learn how to fight it) - The geopolitical chaos I see unfolding in the coming months (and why it’s imperative you begin preparing now). What you are going to learn on this call is one of the most pressing issues of our time. Because just like wars, there will be winners and losers. And I want to make sure you, and your wealth, are on the winning side. So I hope to see you there. 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The current total of 2,300 metric tonnes represents a 283% increase over the 600 metric tonne gold hoard that Russia had as recently as 2009. Gold bullion comprises 21% of its total reserves. In a nutshell, Russia’s gold is worth about $130 billion at current market prices. It is in physical form stored securely inside Russia. The gold cannot be hacked, frozen or seized through digital techniques or existing payment channels. It’s impervious to sanctions. I have also explained that Russia’s reasons for building up this physical gold reserve go beyond mere diversification (which is a good reason in itself). Russia has constructed a hedge against U.S. dollar devaluation and U.S. inflation. If the U.S. dollar retains its value, the gold may not go up a lot in dollar terms, but Russia will profit from its large positions in U.S. Treasury notes. If the U.S. dollar suffers devaluation or inflation, those Treasuries will be worth less, but the gold will be worth far more. Russia wins either way; that’s the idea behind a good hedging strategy. Russia is also hedged economically because it produces almost 11% of all the oil in the world. This oil is sold almost exclusively in U.S. dollars. If the value of the dollar went down, the dollar price of oil would go up as it did in the 1970s. Because of its oil and gold — both non-digital physical assets under Russian control — Russia is scarcely vulnerable to dollar-based sanctions implemented through digital means or global payment channels. But Russia’s lack of vulnerability to dollar sanctions is about to be put to the test. An invasion of eastern Ukraine by Russian forces is currently being planned. As I explained above, Russia is in the process of surging 10 divisions including infantry, armor, special forces and air support to its border with Ukraine. That’s upward of 175,000 troops equal to a corps in the order of battle. This is not a drill. Putin’s plan is to seize eastern Ukraine, consolidate that territory with Crimea and secure Russia’s access to warm-water ports through the Bosporus and the Aegean Sea. As I also explained above, Biden is weak and will do nothing to stop this. At a recent Biden-Putin summit meeting on video, Biden warned Putin that if Russia invades Ukraine, the U.S. will deploy more troops to Europe and will impose economic sanctions on Russia. Those are empty threats. If Biden wanted to stop the invasion, he would deploy U.S. troops before the invasion, not after. To repeat: I’m not defending the invasion or supporting any troop deployment. I’m just pointing out the obvious. Moving troops after the invasion will not deter Putin. It’s not as if Putin plans to invade Poland or Germany. He wants eastern Ukraine in order to stop Ukraine from joining NATO. He will be content with that for now. 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But it would be devastating to Germany, which is already suffering energy shortages from closing its coal and nuclear power plants. How does making Germany suffer this winter deter a Russian invasion? It doesn’t. It’s just a dumb idea. The final Biden threat consists of economic sanctions. That’s where the gold comes in. Sanctions are likely to have little effect. Russia has been under economic sanctions imposed by the U.S. since 2014. They have not affected Russia’s economy or its oil and gas sectors to any measurable degree. Russia produces 10.5 million barrels of oil per day (about the same as Saudi Arabia) and provides 11% of all the oil output in the world. Isolating Russia from the global economy and the dollar payments systems is simply not possible without risking $10.00 per gallon gas prices at the pump. Biden won’t risk that. In any event, Russia’s gold reserves (and reserves in non-dollar currencies including Chinese yuan), as well as continued dollar revenues from oil and gas exports, will insulate it from U.S. dollar-based sanctions. Russia has been planning to neutralize dollar sanctions with physical gold for years. In extreme circumstances, Russia could surreptitiously swap physical gold for needed imports. Gold is an element (atomic number 79) and cannot be traced if it is melted and re-refined. Gold could be leased for hard currency or used as collateral for loans. Merely having the gold will give trading partners confidence in Russia’s status as a financially sound counterparty. In Russia, strategic financial preparation is just as important as strategic military preparation. The two aspects of geopolitical strategy go hand in hand. Also, Russia is not alone among central banks in building up its gold reserves. Here are the major central bank additions to gold reserves in 2021: Belarus: 2.80 metric tonnes Brazil: 62.3 metric tonnes Cambodia: 5.00 metric tonnes Hungary: 63.0 metric tonnes India: 71.0 metric tonnes Ireland: 2.00 metric tonnes Japan: 80.8 metric tonnes Kazakhstan: 15.0 metric tonnes Mongolia: 5.70 metric tonnes Poland: 3.10 metric tonnes Singapore: 26.3 metric tonnes Thailand: 90.2 metric tonnes Uzbekistan: 42.6 metric tonnes That’s a total of 469.9 metric tonnes. To put these gold acquisitions in perspective, there are only 35,582.3 metric tonnes of gold held by official institutions in the entire world. The acquisitions above represent a huge increase in official gold holdings in a single year. Gold is now a weapon of war. There’s nothing new about that. Gold has always been a strategic asset. Fifty years of dollar hegemony since Nixon ended what remained of the gold standard in 1971 have caused policymakers in the West to ignore the importance of gold in geopolitics. Once the role of gold in the future of Ukraine dawns on Western strategists and the media, investors will join the central banks in buying gold. Prices will surge. Now is a great opportunity for you to beat the rush. Russia is about to teach the U.S. an old lesson about gold. Ukraine is the prize. Gold is a critical instrument of victory. Regards, Jim Rickards for The Daily Reckoning P.S. A war has been quietly raging behind the scenes in America. [Now it may have finally reached the tipping point.]( This story has many levels, and a history that cannot be ignored. That’s why [this Wednesday the 22nd at exactly 1:00 p.m. EST…]( I’m going live on Zoom with a small group of readers to break the story. And I think you need to be there. [Click here to register for my urgent Zoom call]( We are going to cover things like: - Why there’s a 90% chance of Russia invading Ukraine in the coming months (and the implications that has for your portfolio, your investments and your way of life) - The real reason for the headlines about the pandemic and inflation (and what they are designed to cover up) - The silent war that’s been raging in the U.S. for the last 20 years (and why I was asked to join the Pentagon at a top-secret weapons laboratory to help them learn how to fight it) - The geopolitical chaos I see unfolding in the coming months (and why it’s imperative you begin preparing now). What you are going to learn on this call is one of the most pressing issues of our time. Because just like wars, there will be winners and losers. And I want to make sure you, and your wealth, are on the winning side. So I hope to see you there. [Click here now to register for Wednesday’s urgent Zoom call.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [James Rickards][James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. 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