Russia Conscripts Gold Into Defense Of The Ruble
Today, on account of Russia's war against Ukraine, a worldwide currency war is raging as well and it is largely a war over gold.
Led by the United States, the West is trying to prohibit most commerce with Russia and is specifically targeting Russia's gold reserves, trying to prevent the use of Russian gold in trade:
This attempt to freeze Russia's gold is a proclamation by the West that gold remains the most powerful sort of money -- money without counterparty risk.
In response Russia is making the same acknowledgment, since Russia is more or less remonetizing gold officially. The Russian central bank has begun buying gold from Russian mines at a fixed price in rubles, establishing a gold standard within Russia.
The Russian government is suggesting that gold can be payment for its oil and gas exports.
And the Russian government has removed the value-added tax from domestic gold sales to the public to encourage Russians to trade their rubles for domestically mined metal instead of foreign currency.
These moves by Russia have strengthened the ruble after its crash when the West's sanctions were imposed. Indeed, the ruble finished March as the month's best-performing currency, only 10% lower against the U.S. dollar compared to where the ruble was on February 24 when Russia invaded Ukraine and the West began imposing economic sanctions on Russia:
From a low of 139 rubles to the dollar as of March 7, the ruble was up to 83 to the dollar yesterday.
That is, the West is trying to prevent gold from becoming international money again, while Russia is striving to restore gold as an international reserve currency if not the international reserve currency. For the time being Russia seems to be buying gold, not selling it, as the West thought Russia would do and sought to prevent Russia from doing.
Gold seems to be working well for Russia and the ruble.