Traders Betting Russia’s Next Move Will Be to Sell Gold

Zerohedge ^ | Tyler Durden | 12/17/2014

[riverdawg]

What do you think will replace the dollar as the reserve currency? The Euro zone is more likely to contract than to expand in the next few years. Nobody wants to hold yuan since the Chinese are hell-bent on inflating their way out of a big slowdown. The yen is a possibility, but the long-run demographics of Japan are bleak and it's population and economy will shrink by one-third in the next 25 years. there are no obvious alternatives to the dollar.

[Zakeet]

Putin has at least one simple plan that he can fall back on:

• He could do what the Fed and its criminal conspirators do ... sell paper gold. That would give him dollars which he could use to ...

• Buy contracts for physical gold and then demand delivery.

Imagine, exchanging currency for money ... and at a significant discount.

Even better, for only about $1 billion, he could collapse the Comex; for about $4 billion, he could trash the LBMA. That would trigger an estimated 100-150 times that amount in precious metals derivatives ... which would trigger a pile of credit swaps and interest rate swaps ... which ... well, you get the idea.

If this action is a little too steep for him, he could work the same magic in silver. It is even more suppressed than gold, and the market is much smaller in size.

And that example beautifully illustrates two problems with currency wars ... once started, they have a life and course of their own, and they can do a hell of a lot of harm.

[Vermont Lt]

Russia has a boat load of dollars. Why would they use Gold when they can use fiat and their treasuries?

Gold is the last resort. They are quite a ways from that. At least this week.

[blam]

"they may be forced to dip into their gold reserves"

Isn't this the reason countries buy gold?

[blam]

[Forward the Light Brigade]

Invade Ukraine or Moldavia is my bet. Put Russia on a war footing and impose martial law.

[grumpygresh]

Good question. No one can be sure but it does look like the dollar is done as the stand alone reserve currency as long as the US continues to rush headlong into fascist-socialist police state.
I could see a hybrid currency of major Western powers backed by the IMF and major Western banks. This could be very dangerous because it would digital only, fiat, and backed by a police state with capital controls etc.
I do believe that a competing regional currency could emerge among Asian/BRICS nations. China and Russia have a lot of gold and won’t just give it up to back a world currency. The Russians hate the US and the Chinese haven’t trusted the West since the Opium Wars; I doubt that they will submit to the Western elite hegemony.