.
Posted on 03/30/2022 4:31:12 PM PDT by PK1991
It's official! Russian Central Bank announces that the ruble is tied to gold! 5000 rubles per gram.
The Central Bank of Russia has officially announced that the Russian ruble will be tied to gold as of March 28, 2022, The rate is 5,000 rubles per gram of gold ingots. There are 28 grams in each ounce. 28 grams for 5,000 rubles per gram is 140,000 rubles.
Are you following me this far?
The conversion rate of rubles into US dollar is 100 rubles, 90 pounds, for each US dollar.
If the rubles are tied to gold at 5000 rubles per gram, and there are 28 grams per ounce, which means that an ounce of gold would cost 140,000 rubles, then the conversion into US dollars means that gold costs 1400 dollars per ounce when used the rubles, instead of 1,928 dollars by ounce using the dollars.
Russia just wiped out about 30 percent (30%) of the US dollar worldwide when it comes to gold ingots.
People all over the world are literally throwing their money on the ruble and throwing away dollars and euros to do it. What Russia just did is the financial equivalent of detonating a nuclear bomb.
FYI, the last guy on this planet to try to support a currency with gold was Muammar Quadaffi of Libya.
NATO entered Libya, bombed it to death, until the Libyan people took Quadaffi on the street, beat him with blood and planted a bullet in their head. As of now, 10:39 PM EDT, I suspect bankers around the world are on the phone between themselves and the heads of state, instructing them that what Russia has done will totally destroy both the US dollar and the euro, and those bankers of Frog to the heads of state that world war 3 must start immediately.
Let me explain why.
Today, the Central Bank of Russia anchored the ruble to gold.
Last week, Russia said it would sell only OIL and GAS in . . . . Ruble!
This means that Russian oil and gas are anchored in gold with rubles like gold proxy.
EFFECT: Europe (which needs Russian gas and oil) will now have to buy rubles from Putin using gold, or pay for oil and gas with gold itself.
Currently, the FOREX rate for Rubli to Dollari is around 100:1
BUT... with 5,000 Rubli now equivalent to a gram of Gold, and oil being priced directly into Gold, we will see a MASSIVE price disturbance in the FOREX markets, in terms of how much Gold a Dollar can still buy.
Foreign countries holding our dollar debt notes as a reserve will see an immediate and much less use for them and want to start downloading them in favor of something more stable; something that holds its value.
Basically, any currency anchored in gold will fit into the account. which means countries like that - like Japan - will start unloading their dollar debt as soon as possible - are not going to go down with the ship! They'll move to more stable values like... The Ruble.
This will have a DE-flationistic effect on the Rublo, making it more precious with time. This also means that Putin can re-find the ruble whenever he wants, at 500, or 50, or 10. He just keeps getting more precious to him.
The immediate result is that all those foreign countries dumping their dollar reserves will make all those excess dollars start going home, triggering a worse hyper-inflation than we already have in the USA.
OK. Time for a reality check. Pegging the ruble to gold will not have any affect on the dollar as a reserve currency. Reserve status is based on the quality of a country’s debt. Debt spelled backwards is investment and no one in their right mind wants to invest in anything denominated in rubles and protected by the Russian court system.
I agree with you that the folks selling gold should not be trusted—it is a risky investment just like everything else.
That said, a gold based currency is a good temporary solution in a time of uncertainty.
“Reserve status is based on the quality of a country’s debt.”
True—but the value of US debt is on a steady decline—and the rest of the world is starting to pay attention.
Number 2 in production.
OK, but relative to Russia's debt?
I think that the demand for gold will far outstrip the supply and the ruble will be devalued.
That’s great as long as you have the gold reserves to back it up. But with everyone agreeing that one ounce of gold is worth $1910, your reserves will be snapped up in minutes. I know that if I could purchase an ounce of gold for a Bennie, I would convert my IRA to gold in a minute.
So the lesson is if you are going to tie your currency to a commodity, be sure that 1) you have enough of the commodity to meet demand or your currency is going to be quickly devalued and b) tie your currency to the current rate to have any chance of it working.
Seems to me that Putin is simply converting his oil into gold.
Since Europe/France/Germany say they won’t pay in ruble, they can now pay in gold.
Eventually, Russia will have more gold than anyone else... which means they can crush the petro dollar at will if that hasn’t happened already... Thanks to Biden freezing Russian held US dollars.
Nixon had to shut the gold window in the 70’s precisely because countries actually starting demanding the gold. Same thing will hspoen here.
“Well you didn’t really think you could get gold just because we said it was backed by gold...”
Thats a fail. Russia already folded on the demand for rubles and will accept euros.
Two comments:
1) A nitpicky comment is that there gold is measured in Troy ounces, which contain 31.1 grams, rather than ordinary ounces of 28.3. THat moves the calculations 10%
2) A lot of this argument hinges on whether or not the gold ruble is redeemable. Remember when the US dollar was worth 20 dollars per ounce, but the gold window was closed? Russia will have the same issue here if they do not establish and honor gold redeemability.
Or when the price of gold was $35 in the Nixon years?
That’s not at all how it works. The gold standard is about fixing the value of your currency, not about opening your gold reserves for purchase or tying your money supply to any actual gold reserves.
Abandoning the gold standard has more to do with the need To have inflation to offset debt and controlling the money supply to ameliorate recession.
Implementing the gold standard probably means Putin is worried about a manipulation attack on the ruble.
Germany says to still pay for Russian gas in euros/dollars after Scholz-Putin call
March 30, 2022
https://freerepublic.com/focus/f-news/4051026/posts
In a phone call between the leaders, Putin told German Chancellor Olaf Scholz that nothing would change for European partners and payments would be made in euros and transferred to Gazprom bank, which would convert the money into roubles, the German spokesperson said.
Gazprom is NOT sanctioned - so Olaf Doltz gets the fig leaf of not paying in roubles, while Pooty gets the cash through the unsanctioned Gazprom bank.
ALREADY there are Twitter dolts calling for Gazprom to be sanctioned.
"Let's shut down the German economy!" say the dolts.
I wouldn’t say you’re wrong. Things have a funny way of
working out when we think they won’t. On the other side
of the coin, they also turn out worse than we thought too.
We’ll see how it turns out together.
For both our sake I hope you are wrong.
No one cares what the currency is fixed to if its not redeemable. Like saying you have insurace but the insurance company wont actually cut a check.
Russia Pegs the Ruble to a Bottle of Vodka.
There fixed it.
.
.
https://www.bitchute.com/video/jJbeFpkb95JK
MONEY RESET RUSSIA AND CHINA WANT GOLD-BACKED CURRENCIES MAR.30.2022
I may be wrong, but my understanding is that only domestically used rubles will be backed by gold. Everything outside the country will float.
In theory, but not only did the US abandon the gold standard from 1932 to 1944 Roosevelt actually made it illegal to own gold in the 1930s, the very opposite of making it redeemable.
As a result, any ability to actually redeem becomes dependent on the next political whim. Besides which, gold itself is actually pretty clumsy to use as currency for most transactions (as is cash anymore). Even when redemption for gold is defined and possible it usually not particularly useful. Plus I can redeem my dollars for gold whether there is a standard or not. It is just whether I redeem at a fixed or market rate.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.