Bank Of Russia And Putin Fundamentally Changing Global Trade System?

As The Destruction Of The Dollar Plays Out

By MN Gordon of the Economic Prism

The United States and Western Europe are playing checkers. Russia and China are playing chess.

This mismatch is grossly evidenced by the recent salvos in the financial warfare being waged between NATO allies and the burgeoning Sino-Russian alliance. 

Putin had his own countermeasures ready. To stabilize the ruble, the Bank of Russia offered to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, thus linking the ruble to gold. This quickly limited the ruble’s devaluation in terms of U.S. dollars because gold trades in dollars.

Then, in retaliation for the sanctions, Putin required foreign buyers of Russian gas pay for their imports using rubles. This is significant because Russia is the world’s largest natural gas exporter. What’s more, Europe is dependent on Russian natural gas for about one-third of its total demand. 

By linking the ruble to gold and the price of natural gas to rubles, Putin has, in effect, linked the price of natural gas to the price of gold. The same thing can also be done with Russian oil and other critical Russian exports, like wheat. 

By linking the ruble to gold and then linking energy payments to the ruble, the Bank of Russia and Putin are fundamentally altering the entire rulebook of the global trade system. They’re also accelerating change in the global monetary system. 

The implications of these actions have recently been detailed by Credit Suisse analyst, Zoltan Pozsar, and Alasdair Macleod via GoldMoney.com. 

By linking the ruble to gold and then linking energy payments to the ruble, the Bank of Russia and Putin are fundamentally altering the entire rulebook of the global trade system. They’re also accelerating change in the global monetary system. 

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