Tuesday, April 9, 2019

Are Russia and China Considering a Move to a Gold Standard?

By Robert Wenzel

Bruno Maçães writes in the Moscow Times:
Russia is buying gold. A lot of gold. Within the span of a decade, the country quadrupled its reserves. Gold buying last year exceeded mine supply for the first time, so Russia is about to become a net importer of the metal.

Commentators have suggested possible reasons for the buying spree. Are the Russian authorities preparing for a renewed clash with the United States and are they attempting to reduce their vulnerability to financial sanctions? Or do they fear a homegrown financial crisis?

Others suspect something bigger may be at play.

The sheer size of the purchases might reveal bolder motives, with Moscow preparing its first salvo in the coming battle for a monetary reset.

What makes the recent moves especially significant is the fact they are being replicated in Beijing. According to official data, China raised its bullion reserves to 60.62 million ounces in March from 60.26 million a month earlier; last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.

China may actually end the year as the top buyer after Russia. Right now it looks like a close race.

The purchases are unlikely to have been coordinated by Russia and China, but some mutual influence is evident: the two countries expect to benefit from the other’s purchases, which should be supportive of long-term prices.
Maçães goes on to suggest that the two countries might be considering launching a gold-backed digital currency. But the way he describes how such a digital currency would be introduced would require the two countries to give up direct control of their gold. That would seem unlikely. Perhaps Russia and China are setting up for an old-fashioned gold standard money.

Whatever is going on, it is clear they both like gold--and so should you.

Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank and most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.


  1. Alasdair Macleod estimates China owning much, much more gold than they have officially announced, and China's citizens are estimated to own at least 17,000 tons.

  2. An alternative reading would have R and C buying gold with "Other Reserves", flooding the world with Fiat while their gold "value" improves. If a "Gold Standard" appears it will be because this power play left others impoverished by inflation with the Strong Currency backed by gold.

    China could not move to a GS now as they are scrambling to cover their tragic mistakes (See: "Ghost Cities"). Their increase in Militarism also works against a GS since guns cost more than butter. China's Marxist driven Slave Economy would not allow that either at this time.

    Russia? Always looking for a future pivot. A GS for them before others if the Geo-Politics finds a wedge opening.