🇬🇧 «People are talking about new red lines for chemical, biological, tactical nuclear weapons or whatever. For me, the red line has already been crossed. Putin is indiscriminately bombing civilian targets,» said British Prime Minister Boris Johnson.
Johnson also believes that even more efforts should be made to suppress Russia — particularly, he announced the possibility of taking measures on Russia’s gold reserves.
Their gold is held in their bank.
Good Luck Sanctioning Russian Gold
Russia is working with banks in China and India to reestablish hard currency payment channels.
There’s now proposed legislation in the U.S. Senate to freeze gold reserves held by the Central Bank of Russia.
Well, here’s the problem: The gold is physical, about 2,300 metric tonnes worth about $150 billion, and is stored inside Russia. It can’t actually be frozen or seized at all.
The legislation would impose secondary boycott sanctions on any party that assists Russia in transporting or transacting in gold. But this presumed sanction would be easy to evade.
For example, if Russia puts 100 metric tonnes of gold on a plane and flies it to Beijing in exchange for manufactured goods, they’re not exactly going to issue a press release about it. That’s the kind of transaction that will go undetected by U.S. intelligence.
Gold is an element, atomic number 79, and is easily melted down and re-refined into new gold bars with Chinese markings that are untraceable. The Central Bank of Russia can buy more gold from Russian miners for rubles to make up for the shipment.
Again, that gold is untraceable (Russia and China both have numerous gold refineries). If this is the best the U.S. can do then Putin is not only on his way to winning the shooting war, but he may win the financial war as well.
Unintended Consequences
Russia has also implemented capital controls that will shift the pain of sanctions from Russian borrowers to Western lenders who will now suffer defaults on the Russian bonds they own. And Russia has announced that it will cut off exports of important chemicals, metals and processed gasses to any nation that has sanctioned Russia.
These exports are indispensable to manufacturing processes including semiconductors, automobiles and agriculture. In the end, most of the economic pain will fall on Western manufacturing and farming.
https://dailyreckoning.com/the-last-straw/