Loading ...Russia Put in Gold
While Gold continues to hit the snooze button, trapped in a range from 1900-1967, I thought I would talk about something that should have gotten a lot more attention than it has: Russia announcing that it will only accept payment for natural gas in rubles or Gold and its decision to effectively peg Gold to the ruble at 5000 rubles per gram. This could be applied to all the other commodities it sells too.
“If Gold is pegged to the ruble at 5000 per gram, that’s equivalent to 156k rubles per troy ounce of Gold. By taking 156k and dividing it by the USD/RUB exchange rate, you get the dollar price of Gold. Assuming the USD/RUB is 80, then 156k divided by 80 equates to a Gold price of 1950. If the ruble goes up in value, i.e., the USD/RUB falls, then Gold should rise in price. For example, if USD/RUB is 70, then the Gold price should be 2229. Whereas if the USD/RUB rises to 90, the Gold price should be 1733.
Right now, the USD/RUB is 75.75, which would put Gold at 2060. But the going rate for Gold on the COMEX is 1930. Perhaps there is a discount given that this regime is new and needs to establish its credibility, or the COMEX is supressing the paper price, whereas the physical metal with premium included is closer to 2060. Either way, I am less focused on the rationale for the difference in price but the direction in which the ruble is headed and its effect on Gold.”
https://www.zerohedge.com/news/2022-04-08/russia-put-gold
The Putin Put In Gold
Nice
Because the ruble has rallied so much so fast, the Russians amended their arrangement. It was announce on Friday that as of sometime Thursday they removed the fixed price and said gold would be bought at a negotiated price going forward. Even they were surprised at how fast the ruble would get back to and above where it was before the war started. Doesn’t remove the put just puts it in better context that the floor has been raised but they don’t want to overpay while the Crimex and LME keep the price artifically depressed.
Doesn’t removing the fixed peg also eliminate the arbitrage opportunity and thus reduce the effectiveness/speed at which the Russian Put could force real POG price discovery. Removing the fixed peg removes the challenge from the LBMA and Comex surpression techniques????
Never thought of the CM….brilliant….keep the price low enough to accumulate on the cheap until they blow themselves up.
It’s like boiling a frog slowly…thanks for the take