Robert Moriarty and Patrick Highsmith return as this week’s guests. When Russian President Vladimir Putin declared that countries unfriendly to Russia would have to pay for their oil and gas in Russian rubles, he pulled a chapter out of the U.S. playbook. In the early 1970s America arranged a quid-pro-quo agreement with Saudi Arabia whereby the U.S. used its military might to ensure the Saudi Royal family remained in power so long as it required OPEC (which it controlled) to sell oil only for U.S. dollars. The U.S. also used its military to force nations not to buy oil with euros.
When the U.S. and NATO cut off all U.S. dollar payment mechanisms from Russia after that country invaded the Ukraine, understandably Russian President Vladimir Putin began holding Russian oil and gas hostage saying that he would soon refuse to release natural gas to European countries unless they paid in Russian rubles. It is well known that many European countries are highly dependent on Russian gas to not only avoid freezing to death but to keep the wheels of industry turning.
Oil prices and diesel prices soared after reports came out that Russia has now cut off the gas supply to Poland and subsequently to Bulgaria, and out of concern that the reduced supply of natural gas to Europe will force the continent to use alternative forms of energy, mainly oil and diesel, already globally undersupplied.
No commodity is more essential to the health of modern economies than energy. We asked Robert how he thinks this will all play out economically and geopolitically and how investors should factor this emerging new monetary regime into their investment decisions. Vladimir Putin is demonstrating that there is no monetary commodity more essential than gold in order to buy energy products. Timberline Resources’ Carlin style high-grade gold discovery in Nevada has the potential to become a multi-million-ounce discovery. Patrick explained why.
