RUSSIA GOLD BASED CURRENCY.

Russia buys record amount of gold. 
WILL PUTIN CONVERT TO A GOLD-BASED CURRENCY ?   

THE FINANCIAL COMMUNITY HAS NOTICED THIS GOLD-BUYING SPREE FOR A LONG TIME NOW, SEVERAL YEARS ACTUALLY, BUT WITH RECENT UPHEAVAL IN THE UKRAINE AND THREATS OF FURTHER SANCTIONS BY THE U.S., PUTIN MAY SEE NO ALTERNATIVE BUT TO "PLAY THE GOLD CARD", AND THERE IS VERY LITTLE THE U.S. COULD DO TO STOP HIM!

[NOTE, UPDATE, APRIL 14, 2015: RUMORS ARE FLYING THAT RUSSIA MAY HAVE BEEN ON TRACK FOR AN AUGUST TO SEPTEMBER, 2015 DATE FOR GOING ON THE GOLD STANDARD, AND QUITE A FEW ARE SAYING THAT IS THE REASON THE SAUDIS CREATED THIS LOW CRUDE OIL DEAL, PERHAPS AS A TRADE-OFF WITH THE UNITED STATES.

RUMORS ARE JUST RUMORS, FOR NOW, BUT WHAT IF THE U.S. SAID TO THE HOUSE OF SAUD, "LOOK, YOU DROP OIL PRICES AND WE'LL HELP KEEP THE ISLAMIC STATE OFF YOUR BACK. THAT WAY WE BOTH HAVE THE SATISFACTION OF KICKING RUSSIA IN THE FACE TO STOP THIS GOLD STANDARD THING."????

MAKES SENSE, BUT NOW OUR BIG BOYS ON WALL STREET ARE WHINING ABOUT LOW OIL PRICES.
LIKE I SAID, RUMORS. ] 

UPDATE, BUT FROM FEBRUARY, 2015: FROM SPUTNIK: 

"Mises Institute contributor Marcia Christoff-Kurapovna believes that Russia may be in the process of planning for the introduction of a gold-based currency, and would be better off for it.

"Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow," Christoff-Kurapovna notes in an analytical article published Friday on the libertarian think tank's website.

Economists close to Vladimir Putin have for years "been expressing [Russia's] unwillingness to remain at the monetary mercy of the US and its NATO allies," among them Sergei Glazyev, economic advisor to the president, and political ally to Deputy Premier Dmitri Rogozin."   

AGAIN, WHO CAN SAY?

FUTURES MAG WROTE THAT : 

"The last published gold holding number for Russia in Refined Bullion Bar gold on deposit is approximately 1206 tons (World Gold Council data) and I'm here to tell you they have much more gold on hand than what has been reported as of late. "

WHEN IRAQ AND LIBYA WANTED GOLD FOR OIL, WE SAW WHAT HAPPENED TO THEM....INVASION BY U.S. AND NATO/ALLIED FORCES AND THE DEATH OF THEIR LEADERS.

RUSSIA IS NOT IRAQ NOR LIBYA. 

RUSSIA IS STILL A WORLD POWER WITH A LARGE ARSENAL OF NUCLEAR WEAPONS, AND RUSSIA HAS STRENGTHENED TIES WITH CHINA, WHICH HAS A LOT MORE "NUKES" AND WOULD NOT HESITATE TO USE THEM.

GIVEN SUCH AN ALLIANCE AND KNOWING THAT MOST OF THE WORLD IS AT LEAST A BIT WEARY OF THE DOLLAR AND THE U.S. DOMINATING, AMERICA WOULD PROBABLY NOT PUSH RUSSIA MUCH FURTHER.

PUTIN DOES NOT "PLAY".

Central Bank of Russia spent over 6 billion U.S. Dollars on gold purchases last year in an attempt to shift away from a dependency on the dollar.

According to research by Thomson Reuters GFMS, Russia accounted for nearly one-third of the central banks 461 ton gold purchase.

Russia’s central bank bought 152 tons of gold worth USD 6.1 billions in the first 11 months of 2014, showing a substantial 123% increase compared with the previous year.

It’s the most Russia has spent on the yellow metal since the break-up of the Soviet Union.

Russia accounted for about one-third of central banks’ gold purchases last year as the country spent more on the metal than at any time since the break-up of the Soviet Union amid escalating tensions with the west and a collapse in the value of the rouble.

Interest was also strong from central Asian states. Kazakhstan bought 46 tonnes through 2014 and Azerbaijan 10 tonnes, according to the survey. Iraq also acquired 48 tonnes in the first half of the year.

SINGAPORE, Jan 27 (Reuters) - Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed on Tuesday.

Russia's gold-buying spree comes amidst a bearish outlook for its economy, which is expected to slide into recession this year on low oil prices and the fallout from sanctions over Ukraine.

Ratings agency S&P cut Russia's sovereign credit rating to junk status on Monday, bringing it below investment grade for the first time in a decade.  

April, 2015: 

LET'S JUST FACE IT...THE WHOLE WORLD IS WEARY OF AMERICA'S FIAT CURRENCY.

WHO NEEDS THAT WHEN MORE STABLE CURRENCY IS "OUT THERE"?

AND, AGAIN, JUST FACING FACTS, THOUGH I AM AN AMERICAN, ARE THERE EVEN A DOZEN NATIONS THAT WOULD NOT LIKE TO SEE AMERICA TUMBLE FROM IT'S PLACE AS "TOP DOG" IN THE FINANCIAL/ECONOMIC ARENA, SEE A NEW PLAYER RISE TO THE TOP FOR A CHANGE?

Just this past weekend, as Bloomberg reported, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain SOME gold to help stabilize the currency.  

“We could ask that gold be nominated as part of the SDR. That is one thing I think is quite likely to happen”. 

"There has been much discussion and division over whether the world was moving towards a multilateral super-sovereign reserve currency by way of the Special Drawing Right of the International Monetary Fund or towards a new gold standard by which all currencies would be valued once again on gold. 

Were the BRICS countries going to overthrow the western banking cabal?  Was the US dollar going to inflate into oblivion?  Was the SDR going to become the new reserve currency?  Was a new gold standard going to be implemented instead?

So many questions with no clear outline or determinations on what exactly was going to happen. 

NOTHING fully explains the demand by other countries for gold, such as Russia and India, or even Germany demanding its gold back from the United States. 

Western and eastern banks are all controlled by the Bank for International Settlements.

And just about everyone is predicting that BOTH the renminbi
and GOLD will be added to the SDR basket valuation."

DOES AMERICA HAVE ANY GOLD THAT IS ACTUALLY AMERICA'S  GOLD? 
ARE FORT KNOX AND THE FEDERAL RESERVE VAULTS EMPTY AS MANY NATIONS HAVE ACCUSED THE U.S. OF?
WE KNOW THIS: THE U.S. DOLLAR HAS BEEN A "RESERVE CURRENCY", AND WE ALSO KNOW THERE IS NO "RESERVE" TO BACK IT UP.

WHY WOULD ANYONE SEE A FIAT CURRENCY AS BETTER THAN A GOLD-BACKED CURRENCY, WHETHER THAT IS RUSSIAN RUBLES OR GOLD DINARS?

A "CURRENCY COLD WAR"?     

Russia is prepared to play strategic hardball with the West on the issue: the governor of Russia’s central bank took the unusual step last November of presenting to the international media details of the bank’s zealous gold-buying spree. 

The announcement, in sharp contrast to that institution’s more taciturn traditions, underscores Moscow’s outspoken dismay with dollar hegemony; its timing suggests coordination with the top rungs of government to present gold as a possible currency-war weapon.

RUSSIAN MONETARY FUNDAMENTALS ARE SOUND     

While the Russian economy is structurally weak, enough of the country's monetary fundamentals are sound, such that the timing of a move to gold, geopolitically and domestically, may be ideal. 

Russia is not a debtor nation.! 

 At this writing in January, Russia’s debt to GDP ratio is low and most of its external debt is private. Physical gold accounts for 10 percent of Russia’s foreign currency reserves. 

The budget deficit, as of a November 2014 projection, is likely to be around $10 billion, much less than 1 percent of GDP. 

The poverty rate fell from 35 percent in 2001 to 10 percent in 2010, while the middle class was projected in 2013 to reach 86 percent of the population by 2020.

The repercussions of Russia on a gold-exchange standard would be immense. Above all, it would mean the first major schism in the world's monetary order. 

China would quite likely follow suit. 

It could mean the threat of a severe inflation in the United States should rafts of unwanted dollars make their way back across the Atlantic — the Fed's ultimate nightmare. 
Above all, the country will avoid the extreme debt leverages which would not have happened had Western capitals remained on gold.

The geopolitics of gold also figure into Russia’s increasingly close relations with China, a country that also has made clear its preference for gold over the dollar. (Russia recently edged out China as the world's top buyer of the metal.) 

In the aftermath of the $400 billion, 30-year deal signed between Russian gas giant Gazprom and the China National Petroleum Company in November 2014, China turned its focus to the internationalization of its own gold market. 

IT WOULD BE A SOLUTION TO RUSSIA'S MONETARY DILEMMA 

Russia has made plain her overriding monetary objective: to do away with the US dollar for all her trade, an ambition she shares with China and their Asian partners. 
 Furthermore, in the short-term the rouble's weakness is undermining the Russian economy by forcing the Central Bank of Russia (CBR) to impose high interest rates to defend the currency and by increasing the burden of foreign currency debt.   

There is little doubt that one objective of NATO's economic sanctions is to harm the Russian economy by undermining the currency, and this policy is working with the ruble having fallen 30% against the US dollar this year so far with the prospect of further falls to come.

There is a solution which was suggested in a recent paper by John Butler of Atom Capital, and that is for Russia to link the ruble to gold, or more correctly put it on a gold exchange standard*.  

The proposal at first sight is so left-field that it takes a lateral thinker such as Butler to think of it. 

Separately, Professor Steve Hanke of John Hopkins University has alternatively proposed that Russia sets up a currency board to stabilise the rouble. 

Professor Hanke points out that Northern Russia tied the ruble to the British pound with great success in 1918 after the Bolshevik revolution when Britain and other allied nations invaded and briefly controlled the region. 

What he didn't say is that sterling would most likely have been accepted as a gold substitute in the region at that time, so running a currency board was the equivalent of putting the rouble in Russia's occupied lands onto a gold exchange standard.

AS THE ‘SANCTIONS WAR’ HEATS UP, WILL PUTIN PLAY HIS ‘GOLD CARD’? 

Rather than just sit back and take the pain, Russia is going to seek to reduce

its economic dependence on the West.  

This is already in evidence, with Putin having signed major deals in the energy 

and defense industries with China and India, among other countries. 

Stronger Russian ties with the other BRICS ( acronym for  Brazil, Russia, India, China and South Africa.), or other countries for that matter, may be of some concern to the US, but what can the U.S. do to hinder that?

Under Putin’s leadership, Russia has maintained its territorial integrity, something that had been left in question following the collapse of the Soviet Union, and

Russia retains a formidable military capable of defending its vast frontiers (although not capable of policing the world).  

The economy has grown rapidly and, while still resource-dependent, has begun to diversify in many ways.

Russia also has an advantageous tax system, with a top 13% rate of income tax.

Given these achievements, Putin is not a leader to be taken lightly

and we should pay attention when 

he says it it his desire to end the ‘dictatorship of the 

dollar’, as he did just this week.
HE IS NOT, BY ANY MEANS, THE ONLY HEAD OF STATE WHO IS SICK OF THE U.S. DOLLAR.

Perhaps he will indeed play the gold card he has hidden up his sleeve

and thus kill two birds with one stone:
shore up the rouble and Russian economy on the one hand;

dethrone the dollar on the other.

[NOTE, PLEASE: There was considerable technical difficulty editing this blog. Spacing and fonts seemed main issues. Apologies. Google is not the ideal for blogs on a good day.}

Some sources for this blog not cited/linked above:

http://www.marketoracle.co.uk/Article49336.html

http://www.goldmoney.com/research/analysis/russia-s-monetary-solution

http://www.atomcapital.co.uk/wp-content/files_mf/1416418354AR_1114.pdf  

http://www.zerohedge.com/news/2015-03-07/threat-dollar-world%E2%80%99s-primary-reserve-currency