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Is Gold Russia’s Weapon of Mass Financial Destruction?

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Lots of smart people are wondering if Russia might adopt a gold backing for the ruble to strengthen its ailing currency and economy. The idea is even getting traction in mainstream news with a new article from CNBC. Alasdair MacLeod, an expert precious metals analyst, explains why Russia would favor a gold standard:

There is no doubt that Russia and China, plus the other Eurasian states in their sphere of influence are all accumulating gold and the indications are they see it as central to replacing the US dollar for cross border trade.

It is already in Russia’s interest to cast itself off from inflating western currencies and to base their economy on sound money, aka gold.”

14-12-23-gold-ruble


If one of the world’s largest economies adopted gold, it could send the US dollar price of the yellow metal skyrocketing. What that really means is that the value of the dollar would tumble, because Russia could completely cut the currency out of its trade practices. As Matt Clinch writes for CNBC:

Countries that are indebted and provide substantial welfare for its citizens would be most threatened by any return to gold convertibility, according to MacLeod, who said Russia could therefore be building a ‘weapon of mass financial destruction.’”

It’s hard to not believe that this might very well be Russia’s long-term plan. Russia is blatantly acquiring more and more physical gold. News broke yesterday that it boosted its gold reserves for the 8th straight month in November, adding an additional 18.753 metric tons to its stores.

Fortunately for United States investors, both MacLeod and currency guru Jim Rickards don’t believe Russia will be jumping on to the gold standard too quickly. Rickards told CNBC:

Russia will continue to acquire gold, but will need hard currency reserves also to bridge the gap between today’s position and any future intentions”

This means you still have time to buy physical gold bullion yourself to prepare for this possibility. Russians are undoubtedly wishing they bought gold a year ago, since the price of the yellow metal in rubles has gone up about 67% in 2014.

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