China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

Whoa... who saw that coming?

From the grapevine, I've heard that China and Russia are quietly building their gold reserves. The reason this isn't showing up in LME statistics (not to mention the price) is that they're directly purchasing domestic output. The SDR's are a bit of a red herring IMO. They'll start out with that, but you watch them switch to gold backing when push comes to shove. Already China has a massive gas purchase arrangement with Russia that includes building a pipeline from Siberia, and why not? China needs a replacement market for it's exports and Russia is a logical partner, since they have the energy and minerals China needs. Already the two govt's are sponsoring cultural exchanges, and forward looking Chinese are now studying Russian. No doubt Japan will want a piece of the action - a perfect fit actually, since they have the technology and the capital to make it all happen.

The world is quietly disengaging from USA INC. which is why the Fed is now monetizing the debt. No buyers, you see? In one of those odd historical ironies, America is about to find out what "Splendid Isolation" really means.

Read this guy to stay abreast of the situation: http://blogs.cfr.org/setser/

He and Henry C.K Liu http://www.henryckliu.com are your two best sources.

ebear