My dear impertinents, dear impertinents,
Russia’s central bank gold purchases have been in the news for the past few days.
I had expressed my doubts and my reservations about such a strategy, and I had also demonstrated that it had nothing to do with a “remonetization” of the yellow metal.
This does not mean that this monetization of gold will not take place again, on the contrary, we have probably never been so close to it.
But this was not the subject of the decision of the Russian central bank.
Moreover, in this changing environment which is ours, things always change very quickly and on this subject as on the others.
Russia’s central bank says it will stop buying gold at a fixed price
Russia’s central bank said on Thursday that due to a “significant change in market conditions” it would buy gold from commercial banks at a negotiated price starting April 8. On March 25, the bank said it would buy gold at a fixed price of 5,000 rubles per gram until June 30.
Since this announcement, the ruble has strengthened strongly against the dollar. Five thousand rubles was worth about $52 on March 25 and about $63 on Thursday.
The price of gold on the international market remained stable, around 60 dollars per gram, or 1900 dollars per ounce.
Russia is one of the world’s biggest gold producers, but the country’s refiners were banned from selling bullion on the London market, the world’s biggest, after the Kremlin sent troops to Ukraine in February”. ($1 = 78.6830 rubles)
The central bank will buy gold… at a “variable” price!
The decision of the Russian central bank is not illogical. Quite the contrary, and it will be forced to be very agile depending on the evolution of the course of the ruble, which is by definition volatile during this period of war and sanctions.
For the moment, the Russian government has succeeded in stabilizing the course of its currency and bringing its currency back to its pre-war level. So buying gold at 5,000 rubles was a “bad deal” since Russia could have bought it at a much cheaper price on the international market.
In short, you can clearly see that here Russia is not trying to put gold back into its monetary system but to increase its gold reserves at the best price in order to be able to deal with all eventualities, including that of a return to a form of gold standard.
It is already too late, but all is not lost.
Prepare yourselves !
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Source Reuters news agency via ZoneBourse.com here