Russia overcomes draconian Western sanctions with the help of gold

Russia's gold reserves guarantee reliable protection from Western sanctions

Russia's gold reserves have become the "magic wand” with the help of which Russia easily survived the "hellish” sanctions of the West and achieved economic growth.

The West admires Russia's policy of pegging the ruble to gold

The Russian economy showed unprecedented growth of 3.6 percent in 2023 against the backdrop of more than 16,000 sanctions, as well as huge expenses for carrying out the special military operation in Ukraine. Russia's GDP is to grow by another 2.6 percent in 2024, the IMF said.

Russia has been able to achieve that with the help of its "gold strategy,” The Conversation. com website said. The strategy is about pegging the ruble to gold and liberalising gold trade.

At the beginning of 2022, Russia made a smart move and pegged the ruble to gold in gas trading. Russia also liberalised trade in gold, so now any Russian national can buy a gram of gold for 5,200 rubles and then sell it, for example, on the stock exchange .

According to Western analysts, this made it possible to strengthen the Russian ruble, stabilise inflation and proceed to the gold standard of the ruble in order to make it a reliable replacement for gold at a fixed rate. It is an open secret that any gold-backed currency is more stable and strong. Other counties — both inside and outside BRICS, SCO — started trading with Russia for rubles.

To date, the Central Bank of the Russian Federation has accumulated, including with the help of the population, a huge amount of gold reserves (2.36 thousand tons in 2023). The Russian banking system easily survived the crisis and kept the ruble afloat. No one rushed to exchange rubles for another currency. Instead, the Russian population increases deposits in rubles.

Gold will let Russia survive war

According to the World Gold Council, Russia is now the second-largest gold producer with 324.7 tonnes in 2023, with China taking the lead with 374 million tonnes. Russia is expected to increase gold production by four percent per year before 2026.

A number of zealous political analysts in the West propose sanctions on the purchase of Russian gold, but the experience of Uganda shows that gold exports from this country had a tenfold increase in 2023 despite the US embargo.

It is only gold that provides a guarantee against financial turmoil in the turbulent world. In 2023, $110.6 billion worth of gold entered the vaults of Central Banks around the world. In 2022, central banks purchased approximately 1,073 tons of gold.

Gold will only rise in price

American analysts predict that gold will rise in price, and it is not only geopolitical uncertainty that facilitates this.

Everyone is expecting the bubble of the US national debt ($34 trillion) to burst. Once the stock market in the United States begins to crumble due to high interest rates, investors will dump their bonds and stocks and buy gold instead thus causing a surge in gold prices. When it happens, the US dollar will become a regional currency, and the United States will turn into a regional power.

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Author`s name Lyuba Lulko
Editor Dmitry Sudakov