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Angered by major US Bank, JP Morgan’s “illegal and absurd” blockage of remittance in 2014 from the Russian Embassy based in Kazakhstan intended for the Sogaz Insurance Group, President Vladimir Putin reportedly ordered the launching of “Project Double Eagle” by May 2015.

Putin’s “Project Double Eagle”, when fully implemented, will end the US and EU hegemony on the world’s banking system. This is because the project will cause global energy supplies to be purchased in 18-mm gold coins that contain 0.1244 Troy ounces of 0.900 pure gold emblazoned with a shielded and crowned double eagle. This move is expected to remove the world from the economic dictatorship of the US Society for Worldwide Interbank Financial Telecommunication (SWIFT) System, which is the current standard for almost all global currency transactions.

Russia is the world’s largest natural gas producer with 677 billion cubic meters per year, which makes up over 20% of the world’s natural gas production. In addition, Russia is also the world’s second largest producer of oil and the largest producer in non-OPEC nations.

But is there enough gold to sustain this project? Putin is confident there is.  Aside from their vast gold reserves, Russia was reportedly on their biggest gold buying spree of the decade. They were buying at an all-time high – 55 tons of gold – in the third quarter of last year alone!

Financial analysts, however, have differing views. The current sanctions imposed to Russia by the US and EU has already caused effects on the Russian economy. Standard & Poor downgraded the sovereign credit rating of Russia from BBB to BBB- in late April of last year.

Investors have begun to revise their plans. The Russian Central Bank also said that the country’s international reserves showed a decrease to $456 billion from the pre-sanction $500 billion. Capital flight has an excess of $70 billion. Over all, the Russian ruble has declined compared to the US dollar. However, the weak ruble is advantageous to the weak sectors of the Russian economy like agriculture and automotive industries.

US Control over the SWIFT Banking System

Although SWIFT maintains that it has the capacity to reject pressures from the US and EU, the fact remains that it is influenced by the US system. This influence has resulted in disgruntled nations and protests against the banking system.

  • Because the Western SWIFT System is the main facility used today, the US has the most control over the global monetary system. Their massive control has even led to the use of SWIFT as an economic weapon by implementing sanctions against non-friendly countries. Russia and Iran are two countries that have received sanctions. There were also calls to boycott Israel but these were quickly rejected.
  • In February 2012, US reportedly seized $26,000 that was being wired from Denmark to Germany (two EU countries).  The money was supposed to be used as payment for Cuban cigars previously imported to Germany. In defense of their action, the US Treasury issued a statement stating that the Danish businessman was in violation of the US embargo against Cuba.
  • Belgium questioned the security of the SWIFT system in 2006 following a series of published articles of alleged access of the CIA and the US government to the SWIFT transaction database, thereby compromising the privacy of its data. Belgium then declared that dealings with the US government authorities are in violation of the Belgian and European privacy laws.

The Russian Alternative Banking System

The current pressures from the West to cut off Russia from the SWIFT Banking System has resulted in Russia moving faster than ever to complete its planned international inter-bank payment system and have it up and running by May of this year.

If Russia will only sell their oil and natural gas for physical gold, there are two valid questions:

  • How long will other countries (especially US and its allies) be able to buy with gold?
  • What will happen to the US petrodollar after the West runs out of gold to pay Russia and China for their products?

Europe will not be able to survive without Russia’s energy supply. Russia is, after all, their main energy source. If you go macro, the whole world will not be able to survive if Russia limits its energy sales to only those that have physical gold to pay. Therefore, the Petrodollar will lose its values and the Western rule will crumble.  Note that last week, Russia cut of all gas supply to Europe and redirected it to Turkey, so this has already started.

Since Russia has a steady stream of incoming dollars because of its sale, it can quickly convert these to buy gold, even at current prices. It is interesting to know that the gold price has been dramatically reduced by the US using an artificial inflation of the dollar using market manipulation. These have made the US dollar the ultimate means of payment and asset accumulator. Therefore, previous manipulations made the US dollars anti-gold because the gold’s price typically runs inversely to the value of the dollar.

Russia, together with China, has already started the countdown to the end of the hegemony of the Petrodollar.

The Impact to Non-US and EU Countries

The SWIFT system is dependent on the US Petrodollar. The main principle of the Petrodollar is to allow the Western countries, primarily the US, to live at the expense of the labor and resources provided by other smaller countries. In exchange, the US pays them with gold that has been artificially inflated.

If the Double Eagle Project succeeds, the role and status of the US Dollar in the global monetary system will change. From the ultimate means of payment, it will become only an intermediate means of payment. This means that US Dollar will only be considered as an interim payment for gold, which will become ultimate financial asset.  Not to mention that the US Military Industrial complex will not have the ability to spy in the transactions going through the new payments system.  Many in Europe especially, will find this satisfying.