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Interesting info about the ruble's fall and the rush to gold in Russia

WeissWeiss Posts: 9,922 ✭✭✭✭✭

This is tucked in at the end of a Fortune article about the decline of the ruble in the last few weeks. I found it particularly interesting given the crypto boom of the last 5 years and the dominance of the Euro, the Yuan, and the US Dollar:

A Russian gold rush
The ruble’s plunge has hit average Russians hard. Fortune recently detailed the experiences of 10 Russians dealing with the ruble’s collapse. “It’s like money doesn’t mean anything anymore. It all disappeared at once,” investment consultant Arthur, 31, said of the new Russian reality. “Everything is so volatile right now. I’m waiting and lying low at the moment.”

In an effort to protect their earnings, many Russians are investing in gold, hoping to capitalize on its history as a safe-haven asset in times of economic uncertainty and take advantage of the Russian government scrapping a 20% value-added tax on purchases of precious metals.

Russia’s central bank was forced to halt its own purchases of gold this week as demand for the asset from Russians continues to soar.

Last week, Russia’s Sberbank said that demand for metals like gold and palladium has quadrupled since the war began. The bank plans to increase the number of its offices selling precious metals to “help people protect their savings.”

https://fortune.com/2022/03/15/russian-ruble-expert-opinion-invasion-ukraine-continues/amp/

We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
--Severian the Lame

Comments

  • LukeMarshallLukeMarshall Posts: 1,883 ✭✭✭✭✭

    In times of rapid currency collapse, people look to hard assets to protect their wealth or purchasing power, and in this case its a metal that has been used as money for over 5000 years (and also some of that new fangled Palladium stuff that Russia produces 40% of)

    It's all about what the people want...

  • derrybderryb Posts: 36,031 ✭✭✭✭✭
    edited March 17, 2022 2:33PM

    Say hello to Russian gold. Western sanctions are destroying what is left of the dollars world dominance. Could this be intentional?

    Russian mines produce more gold than does those of Australia, the US or Canada. It will have no problem supplying it's people or it's own vaults.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • DNADaveDNADave Posts: 7,238 ✭✭✭✭✭

    What does a Russian have pay for an ounce of gold these days (in dollars)?

  • derrybderryb Posts: 36,031 ✭✭✭✭✭
    edited March 17, 2022 3:27PM

    @DNADave said:
    What does a Russian have pay for an ounce of gold these days (in dollars)?

    200308.45 rubles (current price) = $1942. Russians are going to always pay the same US dollar price, but as the ruble drops compared to the dollar it will take more rubles to buy the ounce. When it takes more rubles to buy the ounce of gold the conversion of rubles to dollars also changes, thus resulting in a Russian paying the same amount of dollars for gold as do you and I and at the same time paying more rubles for it.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • DNADaveDNADave Posts: 7,238 ✭✭✭✭✭

    When I was in Air Force , members of my unit were buying gold in Iraq for much less than it cost in the US. It wasn’t just a matter of the current conversion rate.

  • taxmadtaxmad Posts: 960 ✭✭✭✭

    @DNADave said:
    What does a Russian have pay for an ounce of gold these days (in dollars)?

    To carry on derryb's point, on January 1, 2022 (assuming 1942/oz gold spot) it would have cost a Russian 14,938 rubles to buy an ounce of gold

  • derrybderryb Posts: 36,031 ✭✭✭✭✭

    @DNADave said:
    When I was in Air Force , members of my unit were buying gold in Iraq for much less than it cost in the US. It wasn’t just a matter of the current conversion rate.

    When an anomaly like this presents itself in any market the "gap" is quickly closed by speculators buying in the host country and transporting the product to another country where they can profit on the difference.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • blitzdudeblitzdude Posts: 5,297 ✭✭✭✭✭
    edited March 17, 2022 4:05PM

    @DNADave said:
    When I was in Air Force , members of my unit were buying gold in Iraq for much less than it cost in the US. It wasn’t just a matter of the current conversion rate.

    Ditto that, gold in Kuwait was 60% what it was in the rest of the world during the storm. Be ready when opportunity knocks as they always say. Semper Fi!

    The whole worlds off its rocker, buy Gold™.

  • cohodkcohodk Posts: 18,508 ✭✭✭✭✭

    @derryb said:
    Say hello to Russian gold. Western sanctions are destroying what is left of the dollars world dominance.

    Haha. Haha. Haha

    So much hyperbole, so.little substance. How deep into the dark web do you have to go to find these opinion pieces?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • tincuptincup Posts: 4,722 ✭✭✭✭✭

    @DNADave said:
    When I was in Air Force , members of my unit were buying gold in Iraq for much less than it cost in the US. It wasn’t just a matter of the current conversion rate.

    What form was the gold in? Over the years, I've tended to learn that a 'bargain' is not really a 'bargain'...

    ----- kj
  • derrybderryb Posts: 36,031 ✭✭✭✭✭
    edited March 18, 2022 10:32PM

    @cohodk said:

    @derryb said:
    Say hello to Russian gold. Western sanctions are destroying what is left of the dollars world dominance.

    Haha. Haha. Haha

    So much hyperbole, so.little substance. How deep into the dark web do you have to go to find these opinion pieces?

    Not to deep.

    Let's start with the Wall Street Journal.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • inkdiverinkdiver Posts: 54 ✭✭

    Hope they were able to buy silver as well.

  • derrybderryb Posts: 36,031 ✭✭✭✭✭
    edited April 5, 2022 5:28AM

    Another conspiracy theory become conspiracy reality - The dethroning of the petrodollar.

    "The catalyst that is helping hurl us toward our monetary rude awakening faster than ever has been the war in Ukraine. Actually, it hasn’t been the war so much as it has been the West’s reaction to the war."

    The beneficiary? Gold

    The decline from democracy to tyranny is both a natural and inevitable one.

  • JimTylerJimTyler Posts: 3,003 ✭✭✭✭✭

    @DNADave said:
    When I was in Air Force , members of my unit were buying gold in Iraq for much less than it cost in the US. It wasn’t just a matter of the current conversion rate.

    Better check that discount Middle East gold. When I worked in a shop back in the 90’s counterfeit gold coins were rampant. They were so good the first thing that made you suspicious was it was too good, no bag marks. They started tumbling the coins to add bag marks.

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