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Russia's Gold Ruble System
Could Delink it From the Dollar




As the events in the Ukraine have taken a tragical turn, Russia is responding to Western financial warfare with a similar weapon.
We might be seeing another country trying to delink from the US dollar.

The Russian media is reporting about a new national payment system, which could delink Russia from the US dollar.

Following harsh sanctions by the West, Russia has announced it will buy and sell commodities and products in rubles instead of US dollars.

The move comes just roughly two months after Russia banned Bitcoins.

Currently, the country has strong chances of developing their own strong currency, potentially propelling it to a higher status.
Let's not forget about Russia being a major gold buyer and, it's also the 4th biggest producer of gold, right after the United States (according to 2006 data by the US Geological Survey).

One could speculate, argue whether Russia is planning to back its new system with its large gold reserves (it has over 1,040 tonnes, 8 % share of foreign reserves - as of 2013, according to the World Gold Council).

It's also important to note that Russia is the biggest oil producer in the World with 13.28 % global share, which is just slightly more than Saudi Arabia's, but roughly 20 % more than the US' (according to the CIA World Factbook).

According to this NASDAQ article, Russia is modelling its payment system to other (existing) Asian payment systems, just as Japan's JCB.

The current measure undertaken by Russia will also influence its sale of petroleum. According to the news spreading, Russia might as well attempt to sell their petrol in rubles, not US dollars.

Theoretically, this decoupling could strongly affect the US dollar's strength as a reserve currency.

However, attempting to delink from the US dollar will be a double-edged sword: Russia risks isolation and might face similar problems as Venezuela why purchasing goods/services from other countries (which would still be part of the dollar zone and/or they're still using the dollar when selling commodities or products).

Russia is not the first country trying to ditch the US dollar. Other have done so (China, Australia, Japan, Iran, Venezuela etc.), either by completely excluding it or, by partially avoiding it through bilateral trade agreements.

The big question is not what happens with the dollar or the ruble, but where the ongoing financial warfare will lead to.

Modern wars are fought increasingly more with financial means rather than physical means. Yet, the effects can be similarly devastating.


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