The Connection Between Gold, Russia, and the US Dollar

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Sanctions against Russia are leading to the collapse of the ruble. So what should we think about Russia’s plan to build up its gold reserves?

In the latest interview with Editorial Director Greg Canavan, esteemed investment strategist Jim Rickards explains why Russia’s central bank is accumulating gold reserves.

Jim discusses the connections between gold, economic sanctions on Russia, and the role of the US dollar as the world’s reserve currency.

Russia’s foreseeable turn to gold

Jim has been writing about gold and its relationship to geopolitics for decades.

In 2011, Jim published his book: Currency Wars: The Making of the Next Global Crisis.

jim ricckards currency wars

Source: Jim Rickards

The first two chapters expanded on Jim’s presentation to the Pentagon in 2009 about a financial war game scenario.

Presciently, Jim’s analysis — more than a decade ago — included discussion of Ukraine, Russia, natural gas, and the role of gold in the world economy.

At that time, Jim’s ideas were scoffed at.

People told him gold was no longer a big player in the financial and geopolitical system. Why focus on gold in your war game planning?

Well, at that time, Russia had 600 tonnes of gold.

Today, Russia has 2,300 tonnes.

In other words, Russia’s accumulation of gold was exactly the course of conduct that Jim warned the Pentagon about way back in 2009.

Russia, gold, and the US dollar: What happens from here?

In Jim’s view, the sanctions against Russia are very powerful.

But does the US establishment realise just how powerful the sanctions are?

As always, it pays to contemplate the unintended consequences of actions.

In the case of sanctions against Russia, the unintended consequences could well be the weakening position of the US dollar as the world’s reserve currency.

As Jim notes in the interview, if the economic sanctions are that powerful, countries may start looking for a way out of the US dollar.

There are other places to go.

As Jim points out, gold is one of them.

No wonder that 21% of Russia’s reserves were in gold at the end of January. That’s in physical bullion, not ETFs.

And, of course, we have to remember that Russia is one of the world’s major gold producers.

So what does this all mean? What does this imply for the supremacy of the US dollar?

Watch the above interview to find out how Jim thinks things will play out in the months ahead.



Kiryll Prakapenka,

For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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