Biden has talked nothing but sanctions against Russia, then said sanctions don’t deter. He clearly thought they would, but he has been wrong almost all the time. Now, Vladimir Putin is outsmarting everyone by making the ruble more valuable than the dollar.
TFI Global reports, Trump said that Putin is a really smart leader. Well, he said this for a reason! Even before invading Ukraine, Putin had prepared himself to deal with the imminent sanctions. But it was the dumb leaders of the West who couldn’t match Putin’s shrewdness. Biden imposed, what he termed as “crippling” sanctions on Moscow and excitedly waited for the Russian economy to “blow up.”
But much to Biden’s chagrin, that delusion never saw the light of the day. Now, consider Russia’s steps to shore up its currency—the Ruble. Russia, with three major steps, has effectively recovered the lost valuation of its currency. And now market experts say that the Russian Ruble is now more stable than the US dollar!
Yes, that’s right. According to Bloomberg, Russians are buying more gold to protect their savings after Vladimir Putin’s invasion of Ukraine sparked a collapse in the ruble and new restrictions made it more difficult to purchase foreign currency or take money out of the country.
Reuters’ Gina Chon says that gold may be one of Putin’s few silver linings.
Increasing household demand for physical gold prompted the Bank of Russia to halt its purchases from banks to ensure there’s enough supply for local buyers, it said Tuesday. The scrapping of a 20% value-added tax on purchases of metals also spurred transactions, the central bank said.
The bank pegged 1 gram of gold to 5,000 rubles. Now that means, one troy ounce of gold or 32 grams of Gold would now cost 1,60,000 rubles in Russia. At the current exchange rate, 32 grams of gold would cost roughly $1,600 in Russia.
But wait, in the US, the same quantity of gold would cost you $1,928. That means Russia has effectively ratcheted up its currency’s value against the dollar by pegging it to gold. If, 1 gram of gold is bound to 5000 rubles, then according to Western standards, the ruble must be valued at 70-75 units against 1 dollar.
The nation’s biggest lender, Sberbank, said last week that demand for gold and palladium had quadrupled, and it planned to increase the number of offices selling the precious metal to “help people protect their savings.”
Gold has a long history as a haven against hard economic times, particularly when there are worries about the safety of local cash. The metal’s near-universal acceptance as an asset makes it equivalent to foreign exchange at times when governments limit access to other currencies.
Earlier this month, the London Bullion Market Association and the CME Group suspended all Russian refineries from their accredited lists, amounting to a ban on newly minted bars from the country entering the world’s top two markets. That means Russians may face restrictions on where they can resell their metal if it has to be remelted by one of the country’s purifiers.
No one has ever said Vladimir Putin is dumb. Sinister rarely is. And while his war on Ukraine may not be going as well as he imagined, he has devised a way to keep all the sanctions that have been imposed against Russia from destroying his country. Who do you think is smarter, Biden or Putin? Please answer in the comments.