EDITOR'S NOTE: Without the benefit of mass adoption, “infinite fiat” is a bankrupted illusion in comparison with commodity-backed money. It’s the use of fiat that makes this illusion functional. And money is nothing without widespread use. But a return to a gold standard, however improbable it may seem today, may already be in the works. We agree with the article below in its suspicions that Russia and China have been working toward a gold standard over the last few years under the watchful eye of the west. Yet hardly any country noticed it since the notion seemed too unfeasible if not archaic to consider it a real threat. Gold is something central banks hold in reserve, most think, but not something you back your money with, as such a move would be too restrictive. The downside of currency devaluation and its effect on the masses helps generate the upside for governments and corporate elites. If Russia, China, and a few other of its trading partners and allies begin adopting a gold standard, how might it disrupt the global economy? To what degree of imbalance would it place the dollar? And how would it impact investors holding physical gold and silver?
The most profound seismic shift in the global monetary bedrock in decades is happening right before our eyes, and no one seems to notice or care. Eventually, they will have to.
No sooner was it that I wrote an article talking about how Russia was going to back the ruble with gold than “one of the Russia’s most powerful security/intelligence officers and a close ally of Putin” has admitted the country’s intentions to do just that.
And I’m predicting that no sooner will the gravity of this decision finally sink in with the West that China will follow closely in Russia’s footsteps and do the same.
Russia backing its currency with gold represents one of the most drastic changes to the foreign currency market in decades. As of 2022, precisely zero countries still adhere to a gold standard, though many countries still hold gold in reserve.
The new global monetary system is likely going to look like Russia, China, India, Saudi Arabia and other countries with commodity-backed, sound money on one side - and the west and our allies, with our “infinite” fiat, under the tutelage of rocket surgeon Neel Kashkari, on the other.
Source: Quoth The Raven
Despite the enormity of the situation, the news hasn’t really been digested by global markets yet. The FX market has been relatively calm, but for the ruble strengthening, and gold prices have crashed so far this week, with front month futures falling nearly $50/oz. on Monday, back down to about $1,860/oz.