In a Dec. 26, 2022 op-ed in “Russia Posts English” co-authored by Russian economists Sergey Glazyev and Dmitry Mityaev, the authors make the case for using gold to protect the Russian financial system as it “jumps off” the bankrupt dollar-based system and helps establish a new international financial architecture. “Russia, together with its Eastern and Southern partners, has a unique chance to `jump off’ the sinking ship of the dollar-centric debt economy, ensuring its own development and mutual trade in the accumulated and extracted strategic resources,” Glazyev and Mityaev write.
To do that, the current shift into trade based on non-dollar “soft” currencies is a necessary step, but Russia is in danger of building up reserves in currencies that are themselves subject to market-induced devaluations. Therefore, Russia should “sterilize” these growing reserves by buying, and producing, large quantities of gold.
“The tough sanctions blockade has created the necessary prerequisites for a 180-degree turnaround in Russian foreign trade. The main foreign economic partners are the countries—members of the EAEU, China, India, Iran, Turkey, the United Arab Emirates, etc. And with each of these countries, the Russian Federation has a trade surplus…. This surplus was taken out of the country (at the same time, half went to pay off the external debts of Russian companies with their replacement by domestic ruble lending) and is reflected in the balance of payments item `net capital outflow.’ ”
Russia now has to deal with “the accumulation of multibillion-dollar cash balances on the accounts of Russian exporters in `soft’ currencies in the banks of the above partner countries.… This money is also subject to exchange rate and possible sanctions risks, it becomes necessary to sterilize their excess mass. The best way is to buy non-sanctioned gold.…”
Glazyev and Mityaev elaborate: “Russia’s transition in relations with friendly countries to trade in national currencies is the right tactical decision, but not a strategic one. If pricing continues in dollars on Western exchanges, trade flows are insured by British companies, then there is no real decoupling from the Western `distorting mirror’—derivative pricing systems.
“In the face of unprecedented sanctions pressure, Russia’s task is not to learn to play by the `crooked rules’ of the West, but to build transparent and mutually beneficial rules of the game with friendly countries, to create their own pricing, exchange trading, and investment systems. And gold can be a unique tool in the fight against Western sanctions, if you count in it the prices of all major international commodities (oil and gas, food and fertilizer, metals and solid minerals).” (https://news.russia.postsen.com/trends/135432.html ) (https://www.vedomosti.ru/opinion/columns/2022/12/27/957178-zolotoi-rubl )
