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Will Putin's Next Step Be To Sell Gold?
"Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves, if it happens it will push gold lower." That is what, according to some people Bloomberg has quoted, is in the cards.
Russia’s surprise interest-rate increase failed to stop the plummeting ruble. Another tool available to repair economic havoc caused by sanctions and falling oil prices: selling gold.
Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers. The Bank of Russia declined to comment on its gold reserves.
Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves, according to Kevin Mahn, who oversees $150 million at Parsippany, New Jersey-based Hennion & Walsh Asset Management.
“Russia is at a critical juncture and given the sanctions placed upon them and the rapid decline in oil prices, they may be forced to dip into their gold reserves,” Mahn said. “If it happens it will push gold lower.”
But others are less convinced.
“There are a number of ways that they could use their gold,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “They could use it as collateral for bank loans, or for loans from multi-lateral agencies. They could sell it directly in the market if they want to raise foreign-exchange” reserves, including to get more dollars, he said.
If Russia decides to sell, the figures to confirm the move wouldn’t be available for a few months, Bhar said.
Selling gold is usually “one of the last weapons” for central banks because some use the metal to help back their currencies, George Gero, a precious-metal strategist at RBC Capital Markets in New York, said in a telephone interview. “They are probably still accumulating gold and keeping it for a bigger crisis,” he said.
While some suggest the accumulation was "tradition" it is still nonetheless an impressive aggregation of the barbarous relic:
So given the efforts to build this gold-backing for their nation's currency, do we really expect Putin to now dump his physical: or perhaps more strategically suggest a true gold-backed currency and jawbone the currency that way?
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IF Russia is considering selling some gold, I hope they have the common sense NOT to sell it into London.
Best to sell it directly to China or India.
Putin should drop a few hints about pegging the Ruble to gold to stablize it and laugh himself silly at the chaos that would ensue. Dreaming, but it would be some damn funny comedy.
BULLISH for corporations, as Russians queue up to stock up on consumables.
BULLISH for gold, as Russians queue up at Russian mint in case government decides to sell any gold.
One oz gold is two years average wages right now. Gold is the last thing they can buy.
"BULLISH for gold, as Russians queue up at Russian mint in case government decides to sell any gold."
The rules for owning gold by private citizens in Russia are different than in the West.
Very interesting. Thanks for sharing.
With silver already down and gold quite stable above 1175 it makes you wonder what direction gold will really take into the next weeks. Maybe it's some silly dip first, followed by a move to 1350 within 4 weeks?
Well, we'll see...It's all about marketing - with the right marketing, you can put dog shit in a glass bottle and make millions...
Or elect a president.
Or elect president(s)
Russia HAS to sell it's gold, it's not like they have $400 billion in cash lying around to weather the storm.
You picked an appropriate screen name.
Gold is 10% of their foreign reserves. Guess what the other 90% is? Stupid donkey indeed.
EDIT: Aha! I see what you did there.
Seeing as they will be buying Russian gas for decades, the Chinese are currently very motivated to exchange "as many" of their soon-to-be-useless Federal Reserve notes for soon-to-be-convertible-to-gas Russian Rubles. Now is the time, not in a few years when the US dollar will be 100 to the Ruble.
Hahahahahahahahahahahahahahahaha
Russia has over $650 billion in foreign exchange, the largest reserves of gold and natural gas in the world plus endless other minerals and literate Russian people who do not speak like this:
http://www.liveleak.com/view?i=0a9_1418597457
This is America's future where the GOP and Dems voted to make Americans lower than illegal aliens the other night. They did exactly what Obama and Soros wanted. Americans are serfs..
Sell their gold?? What planet are you on? They now have the lowest cost oil in Rouble denominated transactions and lot's of forex in USD$ denominated transations. This has been done to break the back of OPEC and US Shale industry, not the other way around.
folk in the Dakotas and Canada gotta really be lovin this. Let's fuck up some of our industry just to show you who's boss Mr. Pootin.........great plan - should end well. We'll show him dammit.
Given that the gold that Russia has accumulated was probably bought at a higher price than the current price, Putin would be insane to sell now.
Besides it wouldn't make sense to sell what you have spent time and money collecting, especially as you can sell, if need be, other reserves.
RUSSIA, unlike this country, has little debt compared to us-and now that the Euro to Ruble ratio has the Russians actually making as much money for the oil they sell-as they have all along think long range you goofy grandmas
and they have TONS of Gold. They would sell their gold no matter how much they paid for it, if it caused the US toilet paper currency to collapse once and for all
Russia has little debt to GDP because they have very little credit.
Mr. Putin is due to talk tomorrow. Let's wait to see what he has to say.
actions likely to speak louder than words
Since the US still controls the price of gold it makes sense to step up giveaway leasing operations to crash gold to just ice the cake and spoil any form of Russia's attempt to save Ruble with gold.
Putin is selling gold, the cost of gold is directly related to the cost of oil, a gold miner's single biggest expense isn't labor or equipment or even the claim but fuel cost in relation to gold.
Idiotic...and transparent.
This is at least the SECOND bullshiting attempt in a week regarding divesting of Russian gold.
MSM, the longest running limited hangout ever.
Who's manning Vlad's suicide watch tonight?
Cant believe ZH would even run with this bullshit... it's an obvious lie.
ZH would not have run this 3 years ago when it was an informative, news-breaking site. Now, it's about clicks. Don't disagree with the Jew-hating, Putin-loving, gold-stacking, prepping members, or you might get banned. I visit this site for two reasons: 1) To see the how the rubble of a once great site has devolved, and 2) To understand how the demented underbelly of the Internet know-it-alls bathe in their confirmation bias.
I marvel at the hubris and cock-sure attiudes of the commenters. It's a lot like being in a sports bar where a bunch of drunks are spouting their expertise about how to coach a football team. Except here, it's a bunch of assholes (probably drunk) spouting their expertise about how to run the global economy.
If I didn't like this site so much 3 or 4 years ago, I'd just stop reading it. But... it's like a car crash. I'm drawn to watch the carnage even though I feel worse after seeing it.
You sound like you're drunk right now. Finally worked up the courage to post. 10 times in the last 2 hours... that's quite a run for being timid all these years.
minge, what have you contributed lately that's added to the stature of comments? is it enough, in your opinion, to pop by and comment that things are/have gone to shit, or do you think you might actually have some bon bon of experience, expertise, insight to offer. please...enlighten us.
WASHINGTON (MarketWatch) — Vladimir Putin has little choice but to withdraw from eastern Ukraine in order to stem the financial crisis that is spinning out of control in his country.
Western sanctions, the drop in oil prices, and crony capitalism in Russia have combined to create a “perfect storm” in Russian financial markets.
Dramatic efforts by the Russian central bank to stop the falling ruble have so far failed. It has revived memories of the 1998 financial crisis.
“What can Putin do? He can’t reform [the economy.] He’s stuck. The only think he can do is to stop the financial sanctions by withdrawing from eastern Ukraine,” said Anders Aslund, a senior fellow at the Peterson Institute.
Andy Kuchins, a senior fellow at the Center for Strategic and International Studies, agreed that Putin’s “only rational response” would be to find some face-saving way to withdraw from eastern Ukraine.
It was certainly a possibility that Putin would respond aggressively by increasing his activities in Ukraine “or even elsewhere.”
Analysts said that capital controls seemed to be the next logical step for Russia.
But Aslund said capital controls will not work. “Russians are far too smart to be influenced by capital controls,” he said.
In a meeting with reporters in London early Tuesday, Secretary of State John Kerry suggested that Western sanctions could be removed quickly if Russia stepped back in Ukraine.
He said Russia had made some “constructive moves’ in the last days in war-torn country.
“Our hope is that in the days ahead we can get a clear, defined path by all parties, where everybody understands what each is doing and living up to agreements and in moving to de-escalate this situation,” Kerry said.
“And I am confident that as rapidly as that can happen, you will see Europe and the United States respond with respect to the sanctions that are in place today,” the Secretary of State added.
The White House announced Tuesday President Barack Obama will sign a bill that would allow him to slap tough new sanctions on Russia.
The bill gives Obama the “flexibility” he needs to deal with Russia, White House spokesman Josh Earnest said.
But Kuchins said that the legislation does not compel Obama to put new sanctions in place.
If it were me, I would look into pegging the ruble to the renminbi, then have my chinese buddies tie the renminbi to a basket of commodities including PM's and oil at these low prices.
Posted this on another article but applies here as well. I am a loyal Zerohedge follower for a few years. Have my PMs, lead and land but I am f'in stupid when it comes to the markets and the methods for playing the market (I don't so maybe I am not so stupid, just non-edjumucated!). Anyway, I can see Russia dumping US treasuries but why don't they simply start demanding gold for their natural gas they sell to the EU? That or simply raise the price significantly in any other fiat currency aside from the US dollar. Its not like the EU has much choice but cough it up. Can someone edujumacate me on why this would not work out for the Russians (aside from the mainpulation in the gold market to kill any gains they might make).
Sudzee. What are you part of the Russian govt, fuck you..fucking joke
Why don't you try sticking your head up your ass to see how it fits
Your shithole country is in shambles. Deal
Putin sold you and your country out..all for his financial benefit. Fact
Welcome to the Putin man boy love association.
Welcome to the Putin man boy love association.
Shambles? Haha !
Here is a shambles in Chicago, IL aka Amerika shithole:
http://www.liveleak.com/view?i=0a9_1418597457
Thsi is your normal American today where Congress the other night voted that Americans are lower than illegal aliens and have fewer rights than illegals. Americans were sold out by Obama, Dems and Republicans.
We'll know Russia is selling gold when they public announce they are buying gold. Nobody tries to run up the price while they are buying.
Putin should sell US Treasury, buy gold and ask for immidiate physical delivery.
++++++ I'd pay to see that......oh....wait, I guess I already am on the hook for lots of stuff already
Should he sell Treasurys right now, even if it's not in Russia's best interest, Bob?
Or should he just sell them because, well, you're a spiteful American traitor and you haven't yet scraped up enough money to head to Moscow Lee Harvey Oswald style and this will help you feel like you're doing your traitorous part?
Presumably Russia sells a lot of its oil/gas in $US (like most other countries in the world).
So while the price of oil in $US terms has declined dramatically, the cost of production in ruble terms has decline even more dramatically, so Russian gas/oil may actually be more profitable now than before the oil crash...
Russia has also been adding gold to its reserves for each of the past several years (perhaps with the $US it is getting for oil) which is also priced in $US, so they aren't exactly getting hurt there either (and again, gold production in Russia is in rubles, so they are way ahead of the game with the ruble crash).
So as long as they have buyers for their oil (whether in $US or Chinese yuan), I don't see how they lose there...and they can use oil revs to buy gold...
Yea, imports to Russia have become prohibitively expensive, but exports (especially resource which represent the largest part of Russian economy) have become more competitive...
So exactly how does this recent ruble crash hurt the Russian economy aside from food imports & hi-tech equipment?
Suspect their resource profits resulting from selling in $US but costs in ruble more than offsets increase in import costs...
Russia selling gold -dreameeeeeeeeeers!
Russia has a history of backing the Rouble with Gold
Unfortunately, Russia has a more storied history of defaulting on its unbacked fiat currency.
Read, Bob, read.
Where's Bob?
Huh? I don't get it. Shouldn't Russia be buying more gold to shore up its currency, even if gold costs more per ruble? Or as per Paul Craig Roberts statement on Greg Hunter's blog, buy up the naked gold shorts dumped on the COMEX market at the wee hours of the morning and ask for delivery? This is kind of a "Goldfinger"strategy, assuming Russia has piled up a mass of phsyical gold. Russia's gold becomes more valuable as the US gold get's "nuked" through exposure of it's inability to deliver physical to make good on delivery.
Russia will never sell their gold, if they need US currency I'm sure China will oblige. Kind of unrelated but still pertinent, I just read that 10% of US homes get their power from Russian made nuclear fuel, I wonder if it's used in subs and carriers as well, gosh darn isn't this globalized economy just great!
https://www.youtube.com/watch?v=SVqgT_6FxMU#t=21
Hmmm, I would love for Russia to institute some type of anti-fraud banking laws to prevent rehypothecation and banker created fiat. Then cash in the ust's and buy rubles at a discount and destroy them/remove from circulation. After reducing outstanding rubles to a predetermined amount, peg to existing gold stores, and BAM, rockets ignited, watch out world. I did this off the top of my head, so I'm sure it's not so simple, but hey, the basics are there. Having said that, it'll never happen. :-O
No, Russia wont sell its gold. Like the last time they "predicted", which never happened. What Bloomberg is trying to do is help someone reduce the value of Gold. When there is talk of sales of it, its value drops. That is all this does. Sad really.
msm did their job, got the BIS talking points out, and yellen did also.
billions of fiat churned, and the BIS got their vig on every nickel of it, and turned into gold, and now it's out of the system, into rothchilds basement.
the gold propaganda always creates lively conversation, but no facts, if we were to guess at facts, people would have to assume the (the most secretive gold holders), the tbtf's are a little short, just from the failed repatraition efforts of some, and the seemingly accurate figures that the comex's gold is rehypo'ed. at 60-1, which means, guessing at facts the tbtf's have say 15,000 tons backing them, guessing 15000x59=885,000 tons short, 5 min. on google, and the few sites i went to agreed, there's been 166,500 tons of gold mined in the history of the world.
if your buying etf's ok, but be warned, thats why people urge if your going to invest in gold, buy physical, (from an honest seller), to keep. 885,000 tons = 1,770,000 lbs. = 28,320,000 ozs., $1200 per. oz. = $33,984,000,000.
so just guessing, in the future gold will be worth less, to be hauled away in re-cyleable trucks, at your expense, or it's worth more than $1200 per. oz..
as always the cme agreements come up, settling in dollars, instead of physical.
with the ruble, where it's at, maybe russia will roll their treasuries into comex contracts, i'm sure they would love to make it public, they couldn't get physical, and be happy to roll it forward, and the worst is they'd get dollar denominated rubles.
with the ruble down 45%-50% against the rising dollar, russia has a lot of cushion for gold to drop.
i read here, putin will speak tomorrow, is the eu. feeling a chill, 1-1-2015 is when the ukraine gas contracts end.
how much, and in what asset-class is the eu. going to give to the ukraine, to pay russia for the gas to flow, f--k the eu., does merkel have putin on speed-dial, on a secure line?
Yeah, right - after all, Bloomberg says so. Idiots if they don't understand, blackguards if they lie.
What Russia is doing is reclaiming the Ruble out of USD, Euro and Pound and killing FX speculators along the way.
30% of Russia's payments are already settled in RUR. And counting.
Remember: 1 Ruble buys as much oil and domestic food as it did a year ago. No iPhones - what can be better? It's foreign "investors" who should look for high-rise windows to fall out of.
bloomberg = bullshit
Not one gram.
Agree + 100 This is a Bullshit article like most coming out of the USA.
Russia will be printing to BUY Gold Not selling !
They talk about Putin like he's a mainstream media consuming american moron. Somehow I doubt that. More likely he'll require physical gold payment for future shipments of oil and gas.
If Putin really has balls, he'll abandon the ruble and officially declare "grams of gold" are now the official money AND currency of Russia... just after they trade ALL their US debt instruments for physical gold.
yeap the bear is covered in GOLD!
https://www.bullionstar.com/blog/koos-jansen/guest-post-russia-selling-o...
When all the western central banks sold hundreds of tons of gold
in the 1st decade of 2000s the price actually rose
So i dont see how this could "colapse" the already beaten down price of gold if ONE single country decides to sell 200-300-400 tons of gold...
Its all about the manipulation of news and what "economic analysts" vomit in the media
Why would Putin exchange something of real value (gold) for worthless fiat?
Why would Putin exchange something of real value (gold) for worthless fiat?