Cutting Russia off SWIFT - Germany and Italy now on board
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Bet on higher oil, natural gas and commodity prices. Ukraine exports a lot of raw materials to the US and Europe. Expect Putin to shutdown Ukraine exports to the US and Europe to spike commodity prices and hurt NATO countries. This tit for tat economic measures will hurt the US and European consumers by a huge amount. Russia has not even retaliated on the sanctions yet but, they will.
I think cutting Russia off from swift has a large potential to backfire.
As long as Europe continues to buy their energy, they'll have to pay for it.
If they did that, and if I was Putin, I would simply demand pre-payment in physical gold.
(After all, they're also talking about seizing overseas assets.)
Given the highly leveraged nature of the gold and silver market, price could shoot up dramatically. Doing a brief, lazy check, (probably off by a bit) it seems like COMEX paper volume is roughly on the order of the size of the gas purchases by Europe of Russian gas. Given the low rate of actual deliveries on the COMEX, it seems like prices would spike dramatically.
Russia could then turn around and sell the gold in Hong Kong, if they don't want to keep it.
Europe could try to get gas from other sources, but the cost of transporting gas across the ocean in a tanker as opposed to a pipeline is going to demand a premium.
It seems like this has the potential to unleash some bad inflation. Perhaps it might also have consequences for banking. Last time I looked, the 5 biggest banks in Europe were trading at a price to book ratio of less than 1.
As long as Europe continues to buy their energy, they'll have to pay for it.
If they did that, and if I was Putin, I would simply demand pre-payment in physical gold.
(After all, they're also talking about seizing overseas assets.)
Given the highly leveraged nature of the gold and silver market, price could shoot up dramatically. Doing a brief, lazy check, (probably off by a bit) it seems like COMEX paper volume is roughly on the order of the size of the gas purchases by Europe of Russian gas. Given the low rate of actual deliveries on the COMEX, it seems like prices would spike dramatically.
Russia could then turn around and sell the gold in Hong Kong, if they don't want to keep it.
Europe could try to get gas from other sources, but the cost of transporting gas across the ocean in a tanker as opposed to a pipeline is going to demand a premium.
It seems like this has the potential to unleash some bad inflation. Perhaps it might also have consequences for banking. Last time I looked, the 5 biggest banks in Europe were trading at a price to book ratio of less than 1.
Cutting off swift means Russian can't receive payments for exports. Which also means they can't pay for imports.
Yeah, what about the spike in oil, natural gas and commodity prices? Russia will still sell oil and China will buy it. You think Russia would care? It would hurt US and European consumers and spike inflation thru the roof? I hope they really kick off Russia off Swift to settle the debate on who gets hurt more? Also, so no more exports to Russia from the US, Germany, etc.? Do not tell me US, Germany and others will not suffer from the loss in exports?
I assume these 'swift negotiations' behind the scenes are related to how we can support these countries financially if their economic ties to Russia are cut. The cost for Germany (and europe) is already huge with the discontinuation of the pipeline. I would love to know how much financial commitment we are offering to get these countries on board with all the sanctions and potential russian swift discontinuation.
Germany is fine with kicking off Russia from Swift so, they decided they can handle it apparently. My interest here is only as an investor and trader, to align my trades with major trends, wherever they may be. We might know the effects on world markets as soon as Monday.
Russian needs to build a new 1000km long pipeline to China if they want to sell more gas.
The construction of that pipeline might start in 2024 and will take a lot of time before it will be operational. To build Nordstream 2 it took 7 years between the signing of the contract and today, and the pipeline is still not operational. The contract for the Chinese line is still not signed.
If the Chinese pipeline, which has more or less the same length, will be build at the same speed, the line will be only operational in 2031. So Russia will not be able to sell the "EU gas" to China for many years. The Chinese pipeline will have the same capacity as Nordstream2.
With a bit of luck Putin will die before that date. And if the Russian regime would be overthrown, Europe might buy Russian gas again. If Russia would become a democratic country after Putin, they will not be best friends with China anymore.
The construction of that pipeline might start in 2024 and will take a lot of time before it will be operational. To build Nordstream 2 it took 7 years between the signing of the contract and today, and the pipeline is still not operational. The contract for the Chinese line is still not signed.
If the Chinese pipeline, which has more or less the same length, will be build at the same speed, the line will be only operational in 2031. So Russia will not be able to sell the "EU gas" to China for many years. The Chinese pipeline will have the same capacity as Nordstream2.
With a bit of luck Putin will die before that date. And if the Russian regime would be overthrown, Europe might buy Russian gas again. If Russia would become a democratic country after Putin, they will not be best friends with China anymore.
Because we'll know Monday what the major trend is going to be?
