Are we at the edge of a new financial world order, triggered by the Ukraine conflict and Russia’s move to gold back the ruble?
Well, we have been noting the fact that both China and Russia have been adding to their Gold Holdings in recent years, in a deliberate strategy to be able to insulate their currencies in time of crisis from the mighty USD.
Since 2005 alone, Russia has more than tripled its gold holdings, so the Russian Federation has the fifth largest officially reported gold reserves after the USA, Germany, Italy, and France. In comparison, by the way Australia is nowhere…
Now, amid all the noise and fury from the Russia Ukraine conflict, is a development which may well shake the international financial system to its core, because the Russian central bank restarted buying gold from banks and will pay a fixed price of 5,000 rubles ($52) per gramme between March 28 and June 30, the bank said on Friday.
The central bank, which suspended gold purchases from banks in mid-March to meet increased demand for the precious metal from households, said the resumption of buying would help ensure sustainable supply and the uninterrupted functioning of gold producers.
The current decision was made against the background of new Western sanctions against Russian banks. The purchases are a clear statement against dollar hegemony, especially when combined with the fact that more than half of all U.S. Treasuries have been dumped since January 2014.So when did Moscow start planning a gold-backed ruble? Economist Jude Wanniski had recommended this as early as 1998 in a sensational editorial in the Wall Street Journal.
Only a gold-backed ruble could free Russia from the debt crisis and establish international acceptance of the Russian currency, he said at the time. It seems that Vladimir Putin has taken up this idea again two decades later.
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