https://www.zerohedge.com/geopolitical/gotgoldorrubles-did-russia-just-break-back-west
Auszug:
That’s Nice… #GotRubles?
And that’s where pegging the ruble to gold comes in.
The Bank of Russia is now a buyer of gold at 5000 rubles to the gram, or 155,500 rubles to the troy ounce. At a Friday March 25th closing price of RUB96.62 vs. the USD that implies a gold price of $1610 per ounce.
The ruble is now freely strengthening versus the US dollar.
Now, that is not that remarkable on its own.
As I explained on Twitter that day:
• 1: At $1550 per ounce the first order effect here is that is implies a RUB/USD rate of around 75. Incentivizing those holding RUB to continue and those needing them to bid up the price from current levels.
• 2: This creates a positive incentive loop to bring the ruble back to pre-war levels. Then after that market effects take over as ruble demand becomes structural, based on Russia’s trade balance.
• 3: Once that happens and the RUB/USD falls below 75, then the USD price of gold rises structurally draining the paper gold markets and collapsing the financial system based on leveraged/hypothecated gold. Now we’re into the arb. phase @Lukegromen postulated w/ 1000bbls/oz.
So, this scheme incentivizes Russians to hold savings in rubles, because the ruble is undervalued. It also incentivizes foreign traders to hold rubles because the ruble is undervalued relative to an overvalued open gold price.
Clearly currency speculators in Moscow, Shanghai, Singapore, Mumbai and Hong Kong are having a field day with this.
Coupled with Putin demanding ‘unfriendly countries’ paying for their Russian imports with either gold or the ruble, the natural choice is for them to buy rubles until such time as the price of gold and the ruble are in sync on international markets.
The howls of pain from the G-7 and Germany in particular are equal parts pathetic and hilarious as they complain that Putin is in ‘breach of contract’ for demanding a different payment currency for gas other than the euros stipulated in the contract.
Earlier Monday German Economy Minister Robert Habeck said from Berlin that the Kremlin demand for natural gas contracts to be paid in rubles is a “one-sided and clear breach of contracts” – saying the contracts must be honored under prior conditions, according to Bloomberg. “That means that a payment in rubles is not acceptable and we urge the relevant companies not to comply with Putin’s demand,” Habeck said. “Putin’s effort to drive a wedge between us is obvious but you can see that we won’t allow ourselves to be divided and the answer from the G-7 is clear: the contracts will be honored.”
The Kremlin’s quick shooting down of the German economy minister’s comments and the G-7’s stance on the ruble came Monday via a Russian lawmaker to state-run RIA Novosti:
“Russian lawmaker Abramov says G7’s refusal to pay in Russian roubles for gas will definitely lead to a halt in supplies.”
Pissed off Russians certainly have a way with words, as a writer, I appreciate this greatly. According to TASS:
Moscow is handling the details of its gas delivery plans to unfriendly countries for payment in rubles, but it won’t engage in charity if Europe refuses to pay in the Russian currency, Kremlin Spokesman Dmitry Peskov told reporters on Monday.
…The Kremlin spokesman remained tight-lipped on what measures Russia might take if Europe refused to pay for gas in rubles, noting that these “issues should be sorted out as they develop.” “But we will definitely not supply gas for free, that’s for sure. It is hardly possible and reasonable to engage in charity in our situation,” he emphasized.
Do you hear that Davos? That’s the sound of the ticking clock.
The Trade’s the Thing…
The reason why this current scheme is already working is that Russia runs a positive trade balance mostly in base commodity exports. Davos doesn’t want them making any money selling those commodities to the world and will continue to put sanctions on to get people to not use rubles.
Auszug:
That’s Nice… #GotRubles?
And that’s where pegging the ruble to gold comes in.
The Bank of Russia is now a buyer of gold at 5000 rubles to the gram, or 155,500 rubles to the troy ounce. At a Friday March 25th closing price of RUB96.62 vs. the USD that implies a gold price of $1610 per ounce.
The ruble is now freely strengthening versus the US dollar.
Now, that is not that remarkable on its own.
As I explained on Twitter that day:
• 1: At $1550 per ounce the first order effect here is that is implies a RUB/USD rate of around 75. Incentivizing those holding RUB to continue and those needing them to bid up the price from current levels.
• 2: This creates a positive incentive loop to bring the ruble back to pre-war levels. Then after that market effects take over as ruble demand becomes structural, based on Russia’s trade balance.
• 3: Once that happens and the RUB/USD falls below 75, then the USD price of gold rises structurally draining the paper gold markets and collapsing the financial system based on leveraged/hypothecated gold. Now we’re into the arb. phase @Lukegromen postulated w/ 1000bbls/oz.
So, this scheme incentivizes Russians to hold savings in rubles, because the ruble is undervalued. It also incentivizes foreign traders to hold rubles because the ruble is undervalued relative to an overvalued open gold price.
Clearly currency speculators in Moscow, Shanghai, Singapore, Mumbai and Hong Kong are having a field day with this.
Coupled with Putin demanding ‘unfriendly countries’ paying for their Russian imports with either gold or the ruble, the natural choice is for them to buy rubles until such time as the price of gold and the ruble are in sync on international markets.
The howls of pain from the G-7 and Germany in particular are equal parts pathetic and hilarious as they complain that Putin is in ‘breach of contract’ for demanding a different payment currency for gas other than the euros stipulated in the contract.
Earlier Monday German Economy Minister Robert Habeck said from Berlin that the Kremlin demand for natural gas contracts to be paid in rubles is a “one-sided and clear breach of contracts” – saying the contracts must be honored under prior conditions, according to Bloomberg. “That means that a payment in rubles is not acceptable and we urge the relevant companies not to comply with Putin’s demand,” Habeck said. “Putin’s effort to drive a wedge between us is obvious but you can see that we won’t allow ourselves to be divided and the answer from the G-7 is clear: the contracts will be honored.”
The Kremlin’s quick shooting down of the German economy minister’s comments and the G-7’s stance on the ruble came Monday via a Russian lawmaker to state-run RIA Novosti:
“Russian lawmaker Abramov says G7’s refusal to pay in Russian roubles for gas will definitely lead to a halt in supplies.”
Pissed off Russians certainly have a way with words, as a writer, I appreciate this greatly. According to TASS:
Moscow is handling the details of its gas delivery plans to unfriendly countries for payment in rubles, but it won’t engage in charity if Europe refuses to pay in the Russian currency, Kremlin Spokesman Dmitry Peskov told reporters on Monday.
…The Kremlin spokesman remained tight-lipped on what measures Russia might take if Europe refused to pay for gas in rubles, noting that these “issues should be sorted out as they develop.” “But we will definitely not supply gas for free, that’s for sure. It is hardly possible and reasonable to engage in charity in our situation,” he emphasized.
Do you hear that Davos? That’s the sound of the ticking clock.
The Trade’s the Thing…
The reason why this current scheme is already working is that Russia runs a positive trade balance mostly in base commodity exports. Davos doesn’t want them making any money selling those commodities to the world and will continue to put sanctions on to get people to not use rubles.
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