A time for Gold

 Gold and the yuan

Siluanov announced that the NWF would now be permitted to double its allocation of Chinese yuan (from 30% to 60%) and, just as importantly, double its allocation of physical gold (from 20% to 40%).

At the same time, its holdings of Japanese yen and British sterling have each subsequently been slashed to zero (2). The last of its US dollar assets had been removed last year. 

In other words, while western governments continue to debase the monopoly money, which we’ve all been forced to use for the past fifty years, Russia is ramping up its efforts to store its wealth in gold and the newly emerging petro-yuan, which many suspect will itself be backed by gold at some point in the not-too-distant future. 

No going back

The freezing of roughly half of Russia’s FX reserves ($300 billion) by the West following the invasion of Ukraine has sped up the demise of the dollar as the world’s reserve currency (3).

The West has not only denied Russia access to its own money, but it’s now considering using those funds to pay for the rebuilding of Ukraine’s infrastructure.

Firstly, the war would need to end before any reconstruction could take place, and there’s no sign of that happening any time soon.

Secondly, taking that money would constitute theft.

Even if somehow western sanctions against Russia were dropped, the international monetary system has now changed forever because, by freezing Russia’s reserves, the West has unwittingly reversed seventy odd years of keeping gold essentially detached from the system.

Russia and China have no choice now but to store their wealth in gold, the one asset which no other country can interfere with.