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To: Toddsterpatriot
The arbitrage will only work if someone is buying/selling at the peg. Doesn't that make it a gold-backed currency?

If Russia was both buying Gold at a fixed price in Rubles and redeeming Rubles in a fixed amount of Gold then the Ruble would be a fully fungible Gold-backed currency.

(It wouldn't be wise to run such a fully redeemed currency unless the Ruble price of the Gold for redemption was a lot higher - this is because of the long history of Gold price suppression).

Simply buying Gold at a fixed price puts a floor under the Gold price. But you couldn't put your hand on your heart and say the Ruble was gold-backed unless it was redeemable in gold.

That said: the value of a nation's fiat is affected by how much Gold that nation has in its reserves, so in that illusive sense many fiat currencies have some level of gold-backing.

For now the Ruble remains backed by Oil, Nat Gas and military might: similar to the way that the USD is backed.

34 posted on 04/03/2022 11:25:04 AM PDT by agere_contra
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To: agere_contra
Simply buying Gold at a fixed price puts a floor under the Gold price.

Why would Russia buy a bunch of gold and then buy more gold for rubles? Why would that make anyone want to hold rubles? Isn't that the purpose of the plan?

37 posted on 04/03/2022 12:24:20 PM PDT by Toddsterpatriot (TANSTAAFL)
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