The Central Bank of Russia has officially announced that, as of 28 Mar 2022, the Russian Ruble currency is bound to Gold. The rate is 5,000 Rubles per gram of gold bullion.
(Note. This story has been corrected to report "TROY" ounces as opposed to dry ounces and the values recomputed to reflect there are more grams per TROY ounce than in a dry ounce).
There are 32 grams in each TROY ounce. 32 grams times 5,000 rubles oer Gram is 1,60,000 Rubles.
The conversion rate of Rubles to US Dollars is 100 Rubles, 90 Kopecs to each US Dollar.
If Rubles are bound to Gold at 5,000 Rubles per gram and there are 32 grams per TROY ounce, meaning one ounce of gold would cost 1,60,000 Rubles then converting that to US Dollars means Gold is $1,600 per ounce when using Rubles instead of $1,928 per ounce using Dollars.
* Russia just wiped out about 30% of the value of the US Dollar, worldwide when it comes to Gold Bullion.
* Worse, because Russia will only sell its oil and gas in Rubles and Rubles are now fixed at 5,000 Rubles per gram, anyone wishing to buy Oil or Gas will need to either pay in Rubles or pay in Gold and they won't get the US Dollar value for the gold they tender as payment!
* People around the world will be literally THROWING their money at the Ruble and DUMPING Dollars and Euros to do it.
What Russia just did is the financial equivalent of detonating a nuclear bomb.
Backdrop
*The last guy on this planet who tried to back a currency with Gold, was Muammar Quadaffi of Libya.
* NATO went into Libya, bombed the hell out of it, until the people of Libya grabbed Quadaffi on the street, beat him bloody and put a bullet in his head.
* As of this hour, Bankers all over the world are on the phones with each other and with heads of state, instructing them that what Russia has done will totally smash both the US Dollar and Euro and those Bankers will be telling the heads of State that World War 3 must commence immediately.
The reasons :-
* Today, the Russian Central Bank pegged Rubles to Gold.
* Last week, Russia declared they could only sell OIL and GAS in....Rubles.
* This means Russian OIL and GAS are pegged to Gold with Rubles as the proxy for Gold.
* EFFECT. Europe (that needs Russian Gas and Oil) will now have to buy Rubles from Putin using Gold or pay for the Oil and Gas with Gold itself.
* Currently, the FOREX Rate for Rubles to Dollars is about 100:1.
* But.....with 5,000 Rubles now equaling one gram of Gold, we are going to see a MASSIVE price disruption in FOREX markets, in terms of how much Gold a Dollar can still buy.
* Foreign countries holding our Dollar Debt Notes in Reserve, will see an immediate and far less use for them and will want to start dumping them in favour of something more stable, something which holds its value.
* Basically, any currency pegged to Gold will fit the bill which means that - like Japan - will start dumping their Dollar Debt as fast as they can - they are not going to go down with the ship! They will move into more stable currencies, like......the Ruble.
* This will have a deflationary effect on the Ruble, making it more valuable over time.
* This also means Putin can re-peg the Ruble any time he wants, to like 500 or 50 or 10. It just keeps getting more valuable for him.
* The instant result is that all those foreign countries dumping their Dollar Reserves will cause all those excess Dollars to start coming home, triggering worse hyper-inflation than we already have now in the USA.
* Is it any wonder why Biden was on stage last week calling for regime change in Russia? He is about to have masses of angry and literally starving Americans marching through the streets here at home demanding answers.
Putin has made a public statement that people will now dump their holdings of Dollars and Euros to safer investments like land, food and raw materials.
Courtesy. Hal Turner On World...Radio Show.
My take
We are passing through extraordinary times!
Tailpiece.
A quiet day at Hotel Sarovaram while the nonsense of the national bandh was going on outside.
Chellakkili and her sister dropped by in the evening to spend time with us.
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