Something big is going down. This is fascinating because they've already taken into account that the US and the west can and does manipulate commodities markets.
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 and COMEX.
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.
For example, Russia could start by specifying that it will now accept 1 gram of gold per barrel of oil. It doesn’t have to be 1 gram but would have to be a discounted offer to the current crude benchmark price so as to promote take up, e.g. 1.2 grams per barrel. Buyers would then scramble to buy physical gold to pay for Russian oil exports, which in turn would create huge strains in the paper gold markets of London and New York where the entire ‘gold price’ discovery is based on synthetic and fractionally-backed cash-settled unallocated ‘gold’ and gold price ‘derivatives.
Russia can want to be paid in Chuck E. Cheese tokens, but that doesn't mean companies are going to go along with it.
Gold has fundamental problems as a reserve/market currency; namely being able to be directly manipulated by foreign governments selling their own gold reserves. The ability of Russia to manipulate other material/metal markets will be minimal in comparison to someone like the US liquidating a fraction of its gold reserves and cratering the ruble.
namely being able to be directly manipulated by foreign governments selling their own gold reserves
as opposed to using US treasury bonds like most of europe which are famously unmanipulatable
Allegedly the US sold most or a lot of its gold many many years ago. China has been accumulating since at least 2009. The thing with trying to "manipulate the market" with physical gold is that it's not really possible considering how finite it is, especially compared to US dollars (federal reserve notes), which can be conjured up at will.
Russia can want to be paid in Chuck E. Cheese tokens, but that doesn’t mean companies are going to go along with it.
Many countries have already signed up in paying Russia in rubles, with the largest being Germany.
Putin is now one of those guys who rant about the gold standard
economist PhD's everywhere fucking creaming their pants to study the various effects of this
Is Russia trying to gouge the EU here, or make a bet that energy won't get relatively cheaper, or both?
You are going to have to look up (US) dollar hegemony and what that means for the world and the US
