Wednesday, February 20, 2013

Russia Buying Up Global Gold Companies & Assets: Stratfor via Global Intelligence Files

For those not familiar with the Global Intelligence Files, here is the description provided by WikiLeaks:
The Global Intelligence Files, over five million e-mails from the Texas headquartered "global intelligence" company Stratfor. The e-mails date between July 2004 and late December 2011. They reveal the inner workings of a company that fronts as an intelligence publisher, but provides confidential intelligence services to large corporations, such as Bhopal's Dow Chemical Co., Lockheed Martin, Northrop Grumman, Raytheon and government agencies, including the US Department of Homeland Security, the US Marines and the US Defence Intelligence Agency. The emails show Stratfor's web of informers, pay-off structure, payment laundering techniques and psychological methods.
They have been staggering the release of these emails over time and there are some interesting emails that I found in one of the latest batches (released February 13th, 2013). While the conversations in these emails were not held recently I have not yet seen any discussion of this information on Gold news sites and blogs, so this is potentially breaking news despite the age of the emails themselves. The millions of emails are no easy feat to search and digest, I have cut and paste excerpts to provide the core message and you can hit the links to read the emails in full.

The gold Russia takes from Kazakhstan and Kyrgyzstan is sold on the open market. Russia only hordes its own supplies, that way they can keep it secret on how much they are actually putting in their mountain caves.

So I would assume that Russia will sell what it extracts in Venezuela too. I'll ask around to see if anyone has estimates on how much VZ is making out of this deal, if anything.

From what I am starting to gather is that Russia wants to control global supplies. As for VZ, I would assume this means controlling how much is extracted and where the gold can be sold. But there is that possibility that Russia may not want to extract any gold in the first place. My assumption is that they are determined to be in the driver seat on world gold prices, letting them skyrocket.

Kevin is looking into this part to see if it is possible to impact the gold markets this way. Rodger and Mark both said they are hearing similar rumblings of Russians in their region's gold sectors. So they are poking into what Russia is doing in South Africa, Angola, Guinea, Mongolia, Indonesia, Malaysia & Vietnam's gold groups.
So the only way Russia can really drive the gold markets is if it is sitting on a huge chunk of global supplies. Do we know roughly what percentage Russia has and how much they are trying to take over in all these places?

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We are not sure they can impact supplies this way. It is a conspiracy theory thus far that Kevin is looking into. He had heard rumors of being able to do this, but no one ever has, so he is looking more into it. We don't know what Russia has really taken over yet. It is a massive research project we're just starting to form between your info, me, Kevin, Mark & Rodger that will most likely take a few months, bc it seems like the Russians are:

* buying a large set of 2nd tier companies under a hundred different non-Russian entities in order to not tip anyone off
* using private Russian firms to buy foreign firms and assets
* buying up gold traders
* buying up gold assets (mines, networks)


So each has to be researched and broken down & you know how shady and tangled Russia can be.
Attached are my thoughts, notes & the intel-ling I did yesterday and today....
Then we can map out the holes...
I think we may have a larger issue once we're done with Russia-Venezuela as I am learning that Russia is buying up gold companies & assets around the world. But this is something I am really going to have to do some heavy lifting research and intel-ling on.

In attachment: 9524_Russia - Gold.doc

Table of Contents:

1) How Russia's gold and diamond sectors domestically work
a. Diamonds
b. Gold
c. The Kremlin's secret gold and diamond stockpiles
d. Kremlin folklore on gold (for fun)
2) Rusoro - Russia's gold company in Venezuela
a. Who, what, where, etc.
b. How Rusoro works
c. Crystallex & Russia
3) Russia's other moves in Gold
Selections from above document (9524_Russia - Gold.doc), I would recommend reading in it's entirety as quite interesting:
Russia’s gold industry is also all over the place. Russia most likely has the largest gold reserves in the world – but no one knows for sure (supposedly even the Kremlin, which I doubt). There are estimates that Russia has between 25-40% of the world’s reserves – so estimates are all over the place. But Russia is only the 6th largest producer.

Russia uses gold very differently than most governments. Gold + diamonds does not make up 1% of the budget or revenues.

The Kremlin started in 2008 diversifying its reserves portfolio (meaning its piggy bank funds) with Gold, so that their reserves were mostly dollars and euros with 10% gold.

However, it is rumored that the Kremlin holds incredibly massive amounts of gold and diamonds in stockpiles – I mean seriously huge amounts.


This allows the Kremlin to sell it to make cash when needed or have the “doom’s day” threat where it could flood both markets should it want to.

For example, when the government needed some cash on very short notice, they sold $1b worth of gold they had lying in the stockpiles… but this is a “secret”

It is an incredibly high-level state secret to how much they have in stockpiles.
For those interested in searching for more Gold (or Silver!) related content in the Stratfor emails, you can have a play with the search page here.

Finally, here's another email that I found which asks some interesting questions for which I couldn't find a response in the email database:
 

2321975     1970-01-01 01:00:00 Date wrong (from August 2011)
Hey Jacob

Not sure if you are the person to pester with this - but I think this could make a really interesting piece for s4. Gold is shooting through the roof right now and VZ's move is to bring the gold home (and the cash, but let's focus on the gold for now). How is this gold used in the European banks who have had it for forever? I'm certain that unless Bank of England just locked it in a dusty vault and forgot about it, the gold has been used on deposit for outside loans. How leveraged is the gold in its European hands? VZ is small potatoes, but a rich oil country. What would be the exposure risk for European banks if everybody did as VZ is doing?

If everybody (or just enough somebodies) pulled their gold home, how would European banks recover? (and how much money would they need to borrow from Berlin and Brussels to meet that withdrawal call?) What would be the long term geopolitical dangers/changes?
Maybe Research could find out where most of the world's sovereign gold is deposited - see where the exposure is most great (my guess is Europe, shaky, shaky government-dictated European banks). Sovereign gold is interesting (to me, at least) and I'm not sure there is much out there about that. It fits into G's economic guidance in that it's about commodities trading and transport. Does the global economy benefit from having sovereign gold stored in European vaults or will a mass exodus of gold from Europe cause a realignment of world banking?

May be totally off base but this is a really interesting article and thought I'd toss the thought your way, solo OpsCenter Man!

Cheers,

Bonnie

FYI- I'm more interested in sovereign gold deposits as a whole, not VZ specifically. As the rest of this article highlights beautifully, VZ's move could signal everything from escaping Libya-like sanctions, collateral for Moscow and China to easy cash for the pillaging that comes with a coup. VZ is just what made me think about sovereign gold and what it means for the global markets and who will be vulnerable to a run on this. It'd been small beans for Russia or China to have 3-4 or maybe 5-6 small-to-medium sized countries to start withdrawing their gold, slowly and surely, bleeding Europe liquidity when it's already hemorrhaging Spanish and Italian blood. Perhaps China is stockpiling gold as a bulwark for the yuan, moving it towards a reserve currency (long way to go with that, I know).
It would seem that speculation over leasing foreign owned Gold held by the Bank of England isn't only the concern of Gold Bugs, but also members of the global intelligence community! And you wonder why I'm campaigning to bring home Australia's Gold from the Bank of England?

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2 comments:

  1. What surprises me is how little they know, lots of questions. Obviously gold is not something the track on an ongoing basis.

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    Replies
    1. It would appear not, the final letter is almost only questions and much of the content in the initial emails is unsubstantiated rumour, but interesting nonetheless and not anything I've seen elsewhere. Perhaps you should offer Stratfor your services and knowledge of the market, for a fee of course ;)

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