“Russian president Vladimir Putin took a HUGE step today to stabilize the ruble by returning to the gold standard – i.e., backing up the ruble with gold. This rule was abandoned in the West in 1971 by President Nixon and since then it led to an economy that is unstable and “fake”, based on the printing of money… This is an excellent move for Russia – except the West will only have one option now: To go to War with Russia and eliminate the danger… Or try to assassinate Putin – as lunatics Sean Hannity and Senator Lindsey Graham said yesterday…” source: Nick Stamatakis-editor Heleniscope.com 04/04/2022
Russia is making the case for owning gold.
The Russian government is abolishing the VAT (tax) on bullion. Pavel Zavalny, the Russian Parliament’s Speaker, has made remarks about economic and financial sanctions. It is undeniable that gold plays a significant role in the safeguarding of Russian wealth. That role could grow in importance, resulting in a paradigm shift in how the world conducts business.
Russia has abundant natural gas and oil reserves. It also exports a lot of natural gas and oil to other countries. Russia is willing to sell — in hard currency, according to Zavalny. What is hard cash, exactly? It’s not American dollars. “If they want to buy, let them pay either in hard currency, and this is gold for us, or pay as it is convenient for us, this is the national currency. As for friendly countries, China or Turkey, which are not involved in the sanctions pressure. We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles. The set of currencies can be different, and this is normal practice. You can also trade bitcoins.”
Zavalny said Russia has no interest in dollars, saying “this currency turns into candy wrappers for us.”
According to MarketWatch’s Brett Arends, this could be meaningless. However, if other countries, such as China and India, follow Russia’s lead, it might have a significant impact. As Arends points out, the United States’ capacity to control the global financial system through a monopoly on the reserve currency is unpopular with many countries.
According to Arends, this strengthens the case for including gold in a long-term investment strategy. “Not because it is guaranteed to rise, or maybe even likely to. But because it might — and might do so while everything else went nowhere or went down. Like in a geopolitical or financial crisis where the non-western bloc decides to challenge America’s financial hegemony and ‘king dollar.’”
Arends calls himself “gold agnostic,” but he said there is no question “it has its uses.”
“Gold is completely private. It is completely independent of the SWIFT or any other banking system. And despite the rise of cryptocurrencies, it remains the most widespread and viable global currency that is not controlled by any individual country.”
Russia’s recent actions could mark a major paradigm change in global finance. As the United States has weaponized the dollar, many countries have been preparing for this for years.
In effect, Russia established a gold standard for the ruble, which is now linked to natural gas.
Russia has the world’s fifth-largest gold reserves. The Central Bank of Russia restarted gold purchases in early March after stopping during the COVID-19 outbreak, only to suspend them again a few weeks later. On March 28, the Russian central bank resumed gold purchases from local banks at a predetermined price of 5,000 rubles ($52) per gramme. Natural gas is now indirectly connected to gold since Russia insists on payment for natural gas in rubles and has linked the ruble to gold. The Russians can do the same to oil, as ZeroHedge explained.
“If Russia begins to demand payment for oil exports with rubles, there will be an immediate indirect peg to gold (via the fixed price ruble – gold connection). Then Russia could begin accepting gold directly in payment for its oil exports. In fact, this can be applied to any commodities, not just oil and natural gas.”
So, what does this mean for the price of gold?
“By playing both sides of the equation, i.e., linking the ruble to gold and then linking energy payments to the ruble, the Bank of Russia and the Kremlin are fundamentally altering the entire working assumptions of the global trade system while accelerating change in the global monetary system. This wall of buyers in search of physical gold to pay for real commodities could certainly torpedo and blow up the paper gold markets of the LBMA(London Bullion Market Association) and COMEX(Commodity Exchange Inc.).”
“The fixed peg between the ruble and gold puts a floor on the RUB/USD rate but also a quasi-floor on the US dollar gold price. But beyond this, the linking of gold to energy payments is the main event. While increased demand for rubles should continue to strengthen the RUB/USD rate and show up as a higher gold price, due to the fixed ruble – gold linkage, if Russia begins to accept gold directly as a payment for oil, then this would be a new paradigm shift for the gold price as it would link the oil price directly to the gold price.”
The petrodollar may be starting to unwind slowly. The petrodollar is one of the pillars of the dollar’s status as the world’s reserve currency. We’ve already heard rumours that Saudi Arabia will accept yuan in exchange for oil.
The United States and other western powers have attempted to seize Russia’s gold. However, as Arends explains, this is practically impossible in practice. “Despite some laughable suggestions that the West might somehow sanction ‘Russian gold,’ there is no way of tracing the identity, nationality, or provenance of bullion. American Eagle coins or South African Krugerrands can be melted down into bars. Gold is gold. And someone will always take it. Carry a Krugerrand to any major city anywhere in the world and you will find people willing and eager to take it off your hands in return for any other currency you want.”
The world’s gold supply is currently valued at almost $13 trillion at current prices. Can you imagine what that price would be if gold were to reclaim its status as the world’s reserve currency? Or if it becomes increasingly important in the sale of oil and natural gas.
Given gold’s importance in the global financial system, it’s only natural to have some in your portfolio. According to Arends, “the argument isn’t that we want to own all gold or mostly gold or even a lot of gold, but that we want at least to own some gold, simply for diversification.”
When Libyan leader Muammar Qaddafi proposed a gold-backed currency for all of Africa, the West intervened and ousted him!
When Saddam Hussein of Iraq stated that he would begin selling oil in currencies other than the US dollar, Iraq War 2 broke out two months later — and he was hanged!
The United States Dollar is the world’s primary reserve currency, which is why wars are fought!
The US and Europe have no choice. If the Dollar and the EURO are to survive, Putin’s Russia cannot!
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