Gold-backed ruble could be a game-changer - page 2.

fiulpro

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After reading this article I remember that image of Putin holding a big Gold Bar.

Apparently Russians became the largest buyer of gold long before these sanctions came into place as well which does mean that the guy had strategies in mind. We might think he is acting without thinking but on the other hand it might try and back his own currency up and at the same time I do think that digital currencies are already taking a stead forward but Gold is honestly a good asset to have most of the developed nations do hoard gold, its value is not going to decrease overnight. Some countries even right now try and back their economy up by hoarding gold but only Lebanon does have their currency which is backed up by gold even right now. Other than that there are still countries living on gold standard at the moment, if someone wants to check it out : https://worldpopulationreview.com/country-rankings/what-countries-are-on-the-gold-standard-today
More or so it might not be such a stupid move at all. But they have to find a way to increase the depth of sanctions to make sure all the hardwork is not in vain. Russia needs to back off, they have to stop doing this, world cannot handle world war 3.

kryptqnick

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What a joke, Russia is truly stuck in the past. They keep fixating on World War II and somehow want to portray Ukrainians as Nazis; they keep pretending it's the Cold War time, and they are a great superpower that will negotiate for areas of interest with the US; and now they're thinking of a "paradigm-shifting" decision to back ruble with gold, which is something countries did BEFORE fiat. I think this gold maneuver is only a temporary cunning workaround to slow down ruble's way toward the abyss, but it's not going to work long term or fully work at all. Although I must say that, at least if we look at some estimated data on how much gold Russia has and how many rubles Russia has, they do seem to almost match in terms of their USD value, so the idea is not as delusional as it might seem.
But still, it's all very rough, and I'm skeptical this will actually work to Russia's significant advantage.

TheCoinGrabber

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Guess it's happening huh? Even before the pandemic there has already been reports about Russia and China planning to move back to the gold standard.

Assuming this is not just publicity/propaganda/threat, how would they formally get back to the gold standard? Would they simply announce that the ruble would be equal to a certain amount of gold? And more importantly, would they allow people to exchange their rubles for said gold? For the latter, I think not.

istiak2277

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Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

I am skeptical of claims russia will back the ruble with gold.

Other nations have made similar announcements in the past only a few years ago.

There is obvious reason why other nations also agree upon this matters. We have seen how USA freeze 600 Billion dollars that is located in Russians central bank as a reserve. I think many allied country of USA is also not linking this type of power demonstration from USA. This gave USA a terms called "sanction power" which they can use against any country to achieve something from that country. This is a weakness for every country against USA.

be.open

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Quote from: DrBeer on April 06, 2022, 06:52:30 AM

Quote from: be.open on April 06, 2022, 02:28:55 AM

I don't understand the reason for your doubts. From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer. Russia can at any time immediately fully repay its foreign debt in gold and withdraw from the external borrowing market, and this will not affect its current cash flows in any way.

It sounds really strong! There are just nuances. With all the "power of the Russian economy", very strange processes are taking place in Russia itself. Please explain in terms of logic, economic laws and theories - why? So what is happening inside Russia:
1. Stagnation of the economy. Even before the imposition of sanctions. Real fall in industrial production
2. Social problems - a sharp reduction in funding for educational, medical, social programs.
3. Destruction of the pension system. And the use of pension funds to solve completely different problems. Raising the retirement age, blocking pension savings
4. Loss of entire segments of the economy in the world market, as well as curtailment in the domestic market.

But such a powerful economy and so much gold? What is wrong here?! Clarify please !

In the modern model of a society of advanced consumption, a higher standard of living is not for those who live within their means and save for a rainy day, but for those who actively use credit leverage and have a chronic budget deficit.

The large gold and foreign exchange reserves that Russia has managed to accumulate is, on the one hand, good, but on the other hand, this means that Russia has been purposefully filling the National Welfare Fund for years, instead of using this money to develop the economy. In fact, this money was systematically withdrawn from circulation and lay dead weight, undermined by inflation (if we are talking about fiat currencies), or taking up space in the vault and not paying dividends (if we are talking about gold).

Since 2014, after the annexation of Crimea, Russia has been under heavy pressure from economic sanctions, so its current economic model is more of a wartime economy than a peacetime one. I think Putin understood perfectly well that the US and NATO would hardly risk entering into a direct military confrontation with Russia (because "there are no winners in a nuclear war"), and the West's pressure on Russia would be economic.

stompix

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A gold-backed ruble, lol.
A currency backed by gold from a nation that has banned its owner citizen and companies from buying foreign currency, so what would be the advantage of this currency if you're not allowed to exchange it for something else?
A gold "backed" currency from the nation that has forcefully exchanged your foreign currency deposits troubles at the value they have chosen to, what would stop them to do again the same and you woke up the next day and instead of having your rubles backed by gold you find them backed by silver. Next day by oil, then by potatoes and then they are going to be backed by rubles 2.0 which are backed by gold.

Bitcoin is not backed by gold or silver or anything else, it is backed by trust, same for us dollar, that's where the value comes from not from some claims nobody can check or force the issuer to respect. Rember the oil-backed petro?

Quote from: be.open on April 06, 2022, 02:28:55 AM

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer.

Life expectancy for a male as Guatemala, crime rate as Zimbabwe  and poverty levels as Thailand, if you can call that living, for a "major" economy.
Btw, you know that out of real major economies Russia is the only one to have defaulted twice lately? Grin

Smartprofit

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Quote from: be.open on April 06, 2022, 02:28:55 AM

Quote from: NeuroticFish on April 06, 2022, 02:14:01 AM

Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

Quote

Linking the currency to gold and energy is a paradigm shift for the global economy, a precious metals analyst tells RT

The Bank of Russia has resumed gold purchases this week, but more importantly, the regulator is doing so at a fixed price of 5,000 rubles ($59) per 1 gram between March 28 and June 30

Do they have enough gold for backing for real all the rubles in circulation? I highly doubt it.
I see it as a desperate PR stunt to show why they forcefully keep the ruble "price" high.
And as I said, it's PR. They're lying (what's new?). They don't have the gold for it, hence it's somewhere between advertising and actual scam.

I don't understand the reason for your doubts. From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer. Russia can at any time immediately fully repay its foreign debt in gold and withdraw from the external borrowing market, and this will not affect its current cash flows in any way.

Russia has a large external debt, but this is not the debt of the state, but the debt of large companies.

Taking into account the fact that large companies are, in fact, backbone state-owned companies, their debt to foreign counterparties can be considered as an external public debt.

In general, the situation is not logical.

If the Government of Russia had planned the current situation in advance, then what was the point of paying the public debt of the USSR and Russia earlier (with large interest rates)?

And huge sums of money were spent on it.

If Russia now had a huge external debt, then it could blackmail the countries of the West. As you know, no one kills his debtors.

If we talk about the gold standard, then in my opinion it is unprofitable for Russia itself.

China and Western countries will very quickly take Russian gold for themselves, since Russia is now in great need of imports. And gold is potentially a more valuable asset than even US dollars.

davis196

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I don't mind Russia and China trying to backup their national currencies with gold reserves.
A return back to the gold standard might be refreshing for the global financial system.
This might force the USA/EU to stop with the fiat money printing madness.
However,I don't believe that Russia will achieve anything other than just stabilizing it's own national currency.
This move simply isn't enough to replace the US dollar as the global currency.
The real thread for the US dollar would be all Asian countries and the EU dumping US dollar transactions.
So far the EU will remain under US influence and this isn't going to change anytime soon.

DrBeer

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Quote from: be.open on April 06, 2022, 02:28:55 AM

I don't understand the reason for your doubts. From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer. Russia can at any time immediately fully repay its foreign debt in gold and withdraw from the external borrowing market, and this will not affect its current cash flows in any way.

It sounds really strong! There are just nuances. With all the "power of the Russian economy", very strange processes are taking place in Russia itself. Please explain in terms of logic, economic laws and theories - why? So what is happening inside Russia:
1. Stagnation of the economy. Even before the imposition of sanctions. Real fall in industrial production
2. Social problems - a sharp reduction in funding for educational, medical, social programs.
3. Destruction of the pension system. And the use of pension funds to solve completely different problems. Raising the retirement age, blocking pension savings
4. Loss of entire segments of the economy in the world market, as well as curtailment in the domestic market.

But such a powerful economy and so much gold? What is wrong here?! Clarify please !

Moneyprism

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Russia will be a game changer,,, where they will offer something that is against the international economic order,, and maybe this will be something that will bring Russia into a more developed country in the future ... but the impact of this is that the global economy will be divided, because there is a bloc that supports Russia/China and there is also a bloc that supports the West

NeuroticFish

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Quote from: be.open on April 06, 2022, 03:35:42 AM

I said directly in my first post on this topic that a return to the gold standard for Russia is now impossible and impractical.

As PR it can somewhat try to prove why Ruble is (artificially) kept at this value.
I don't see other reason for this.

Quote from: be.open on April 06, 2022, 03:35:42 AM

Pegging the ruble to energy resources has more prospects.

It may also be impractical, since the energy prices may fluctuate independently from what the central bank wants to have as the value of the currency notes.
Also if this war continues for too long, the western countries will actually find other energy suppliers, leaving Russia no other choice than selling under the market price to those accepting the deal and turning a blind eye to all the bad things Russia has done especially in the last month.

Quote from: be.open on April 06, 2022, 03:35:42 AM

However, at the same time, the existing gold reserves of the Central Bank of Russia are more than enough to, if necessary, immediately pay in full all of Russia's external debt, which now stands at about $58 billion.

With fiat value getting lower and lower, storing the gold for longer may result in having less to pay on long term.
And gold is not really for that use (to be spent for clearing the debt), it's more to prove the others the country is solvable.
And, finally, we both know how risky is now for Russia to work with the western banks and western money, so most probably they will not move a finger until the west will chill.

be.open

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Quote from: NeuroticFish on April 06, 2022, 03:27:22 AM

Quote from: be.open on April 06, 2022, 03:22:32 AM

To fully ensure the entire money supply with gold? In Russia, there is a very strong shortage of money supply compared to other countries, but to demand that the entire money supply be fully backed by monetary gold on the balance sheet of the Central Bank is a bit too much, don't you think?

Indeed, it is too much. At least we agree on this. Yet, it's not me boasting this, the article premise is that Russian Central Bank will have the Ruble backed by gold.
And math has shown that this is not possible, not fully, even at the discounted price they work with.

I said directly in my first post on this topic that a return to the gold standard for Russia (and any other single country in the world) is now impossible and impractical. Pegging the ruble to energy resources has more prospects. However, at the same time, the existing gold reserves of the Central Bank of Russia are more than enough to, if necessary, immediately pay in full all of Russia's external debt, which now stands at about $58 billion.

These are different things - external debt and the entire money supply, I hope my English is good enough so that there is no confusion between what I say and what you understand from my words.

NeuroticFish

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Quote from: be.open on April 06, 2022, 03:22:32 AM

To fully ensure the entire money supply with gold? In Russia, there is a very strong shortage of money supply compared to other countries, but to demand that the entire money supply be fully backed by monetary gold on the balance sheet of the Central Bank is a bit too much, don't you think?

Indeed, it is too much. At least we agree on this. Yet, it's not me boasting this, the article premise is that Russian Central Bank will have the Ruble backed by gold.
And math has shown that this is not possible, not fully, even at the discounted price they work with.

be.open

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Quote from: NeuroticFish on April 06, 2022, 03:04:18 AM

Quote from: be.open on April 06, 2022, 02:28:55 AM

From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

By the data I've found in a very quick search, the money supply in 2020 was 12.431 trillion rubles and I expect in 2022 the number is bigger. So a simple math tells that at this rate they're at least 186.2 tons of gold short. It's much better than expected (although I have my strong doubts about how correct/real those numbers are), but still not covered 100%.

To fully ensure the entire money supply with gold? In Russia, there is a very strong shortage of money supply compared to other countries, but to demand that the entire money supply be fully backed by monetary gold on the balance sheet of the Central Bank is a bit too much, don't you think?

NeuroticFish

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Quote from: be.open on April 06, 2022, 02:28:55 AM

I don't understand the reason for your doubts.

Because they have a solid history of lying about.. basically everything.

Quote from: be.open on April 06, 2022, 02:28:55 AM

From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

By the data I've found in a very quick search, the money supply in 2020 was 12.431 trillion rubles and I expect in 2022 the number is bigger. So a simple math tells that at this rate they're at least 186.2 tons of gold short. It's much better than expected (although I have my strong doubts about how correct/real those numbers are), but still not covered 100%.

Quote from: be.open on April 06, 2022, 02:28:55 AM

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer. Russia can at any time immediately fully repay its foreign debt in gold and withdraw from the external borrowing market, and this will not affect its current cash flows in any way.

Russia is - by far - not something I would boast as major economy. They don't produce almost anything desired by the other economies, almost all they sell is resources. What's the merit in that?!
Also I live in a country that - before the iron curtain has fallen - tried hard to pay its external debts in full. I do remember how bad it was for the population, so, again, I would not boast this unless I am indoctrinated and don't want to see the reality in full.

So no, you didn't convince me.

be.open

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Quote from: NeuroticFish on April 06, 2022, 02:14:01 AM

Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

Quote

Linking the currency to gold and energy is a paradigm shift for the global economy, a precious metals analyst tells RT

The Bank of Russia has resumed gold purchases this week, but more importantly, the regulator is doing so at a fixed price of 5,000 rubles ($59) per 1 gram between March 28 and June 30

Do they have enough gold for backing for real all the rubles in circulation? I highly doubt it.
I see it as a desperate PR stunt to show why they forcefully keep the ruble "price" high.
And as I said, it's PR. They're lying (what's new?). They don't have the gold for it, hence it's somewhere between advertising and actual scam.

I don't understand the reason for your doubts. From 2014 to 2020, the Central Bank of Russia actively increased the share of gold in its gold and foreign exchange reserves, buying up all the gold that is mined in Russia. As of February 1, 2022, the Central Bank has gold worth $132 billion (about 2,300 tons).

Name at least one major economy in the world that is living within its means with a sustainable budget surplus and does not have a large external debt. Only Russia, there is no other answer. Russia can at any time immediately fully repay its foreign debt in gold and withdraw from the external borrowing market, and this will not affect its current cash flows in any way.

NeuroticFish

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Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

Quote

Linking the currency to gold and energy is a paradigm shift for the global economy, a precious metals analyst tells RT

The Bank of Russia has resumed gold purchases this week, but more importantly, the regulator is doing so at a fixed price of 5,000 rubles ($59) per 1 gram between March 28 and June 30

Do they have enough gold for backing for real all the rubles in circulation? I highly doubt it.
I see it as a desperate PR stunt to show why they forcefully keep the ruble "price" high.
And as I said, it's PR. They're lying (what's new?). They don't have the gold for it, hence it's somewhere between advertising and actual scam.

be.open

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Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

I am skeptical of claims russia will back the ruble with gold.

I think you are right in your doubts, especially since this is not a peg of the ruble to gold, but an obligation to buy gold at a fixed price in rubles, that is, support for the ruble from below.

I think a full return to the gold standard in a single country is impossible and impractical. Partly because the price of gold is determined by a consortium of several banks and this mechanism is not entirely market driven, not 100% determined by the current balance of supply and demand (therefore, spreads between the prices of "paper" and "physical" gold are regularly observed).

Pegging the ruble to gas is a more interesting phenomenon, because money in itself is a kind of life force equivalent and tying a specific currency to a specific energy resource does not look too artificial, and therefore the "gas_ruble" can be successful and viable, like the "oil_dollar" for example.

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Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

Quote

Linking the currency to gold and energy is a paradigm shift for the global economy, a precious metals analyst tells RT

The Bank of Russia has resumed gold purchases this week, but more importantly, the regulator is doing so at a fixed price of 5,000 rubles ($59) per 1 gram between March 28 and June 30, raising the possibility of Russia returning to the gold standard for the first time in over a century.

If the country takes the next step, as has been proposed this week, to sell its commodities priced in rubles, these combined moves could have huge implications for the ruble, the US dollar, and the global economy.

To get some answers, RT spoke to precious metals analyst Ronan Manly at BullionStar Singapore.

— Why is setting a fixed price for gold in rubles significant?

By offering to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, the Bank of Russia has both linked the ruble to gold and, since gold trades in US dollars, set a floor price for the ruble in terms of the US dollar.

...

Talk of a formal gold standard for the ruble might be premature, but a gold-backed ruble must be something the Bank of Russia has considered.

There is an essential difference between buying gold with rubles at a fixed price and what is being said about tying the ruble to gold. To really tie it would be to commit to giving x amount of gold per ruble, as was done before with the gold standart but that is not what we are talking about.

I agree that it is a move that can help strengthen the currency in the short term but it seems to me that the news has been overhyped in some media.

Quote from: Hydrogen on April 05, 2022, 07:44:41 PM

I am skeptical of claims russia will back the ruble with gold.

Me too.

avikz

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Russia has to find another way to continue with the global trade and since they have been thrown out of the SWIFT system, they would certainly want to continue with their own currency. But I think it's only a proposal for now and no concrete decision has been made yet. While Russia is demanding only Rubble payments in exchange of their gas and oil which will force some countries to buy Rubble to support its value. Also he has proposed to peg 5000 Rubbles with the value of 1 gram of fine gold. It's a masterstroke from where I see it!

Russia is the second highest global natural gas supplier just after Unites states and even during the war, they were not replaced from its position. So seeking only Rubble payments for their gas supply and pegging the Rubble value with Gold, will reduce dollar dominance from this sector of world trade. Also it will support the value of Rubble from falling down. It is indeed a game changer in many aspects!

Topic: Gold-backed ruble could be a game-changer - page 2. (Read 266 times)