4 ms·

re: #3 a lot of the recent reporting (usually citing 'world gold council') points out that most of the large central bank purchasers are some combination of rus

re: #3 a lot of the recent reporting (usually citing 'world gold council') points out that most of the large central bank purchasers are some combination of russian commodity purchasers, intertwined with the russian economy, or might otherwise want insulation from relying on USD for international exchange. Because of that I'd also clarify/quibble on the 'confiscation' aspect. I expect the larger motivation is freezing russian entities out of SWIFT and dollar denominated banks. That interrupts foreign transactions even more than losing access to reserve capital. PS: I dont think anyone's moved beyond freezing access to existing russian assets, eg disputing rightful ownership, yet.

fuoqi 2y ago
>I dont think anyone's moved beyond freezing access to existing russian assets, eg disputing rightful ownership, yet. They "just" appropriate "profits" from those assets, which effectively means inflationary erasure of purchasing power on the scale of several billions per year, and use assets to back Ukrainian loans with everyone's tacit understanding of future prospects of those loans.
roenxi 2y ago
> ...are some combination of russian commodity purchasers, intertwined with the russian economy, or might otherwise want insulation from relying on USD for international exchange. I'm going to twiddle my thumbs for another year or two before even looking up data because the Ukraine war will be obscuring the trends - but that phrase could be describing all of Asia and most of Europe as far as I know. A lot of people trade with Russia. "want insulation from relying on USD for international exchange" could even include US citizens. > I expect the larger motivation... Do those aspects affect gold though; it seems like it'd maybe affect the crypto markets and international diplomacy. Scenarios where gold is used for everyday transactions still seem a bit far fetched to me. It seems more likely that people would trade in local currencies. Maybe, I suppose. Reserve confiscation is something that the central banks have to worry about more directly and they tend to be gold holders.
- fuoqi 2y ago
  >It seems more likely that people would trade in local currencies Use of local currencies is certainly on the rise, but the problem is lack of bilateral financial trust caused by various factors, including capital controls. There is the recent example of Russian companies being unable to get rupee-denominated profits out of India, they had either to buy something from India or invest money there. China is also quite strict with its onshore RNB flows which is multiplied by risks of secondary US sanctions. Honestly, I am really surprised that BRICS+ countries haven't yet developed a gold-based settlement system centered around central bank reserves. My main guess: such system would work fine with a more or less balanced trade, but many countries intentionally pursue the export-oriented model, which would work poorly with such system.
  - throwaway290 2y ago
    BRICS currency will not happen because China holds all the cards while keeping RMB non convertible. It's a charade with the only goal to piss of US a bit
    - JumpCrisscross 2y ago
      > BRICS currency will not happen because China holds all the cards More than that, like half of the BRICS have threatened to shoot at or actually shot at each other in the last decade [1]. A BRICS currency is like America proposing a currency union with North Korea. [1] https://en.wikipedia.org/wiki/BRICS https://en.wikipedia.org/wiki/BRICS Egypt & Ethiopia, UAE & Iran, India & China, et cetera
- lazide 2y ago
  Physical gold is a common middle and upper middle class method of transferring internationally and protecting wealth. (Feel free to read that as tax evasion or money laundering - in these situations it’s often a matter of perspective) If you’re trying to do it with millions of dollars equivalent, it’s not great but functions. $100k+? Very common, and remarkably easy compared to other options. During times of great social upheaval and war, it’s often about the only option that works historically. It doesn’t really help the ultra wealthy as much, unless you’re talking nations during wartime type situations, due to physical logistics and security problems. And the poor can’t afford anything anyway, so this kind of thing isn’t exactly a problem for them.

fuoqi 2y ago

>I dont think anyone's moved beyond freezing access to existing russian assets, eg disputing rightful ownership, yet. They "just" appropriate "profits" from those assets, which effectively means inflationary erasure of purchasing power on the scale of several billions per year, and use assets to back Ukrainian loans with everyone's tacit understanding of future prospects of those loans.

roenxi 2y ago

> ...are some combination of russian commodity purchasers, intertwined with the russian economy, or might otherwise want insulation from relying on USD for international exchange. I'm going to twiddle my thumbs for another year or two before even looking up data because the Ukraine war will be obscuring the trends - but that phrase could be describing all of Asia and most of Europe as far as I know. A lot of people trade with Russia. "want insulation from relying on USD for international exchange" could even include US citizens. > I expect the larger motivation... Do those aspects affect gold though; it seems like it'd maybe affect the crypto markets and international diplomacy. Scenarios where gold is used for everyday transactions still seem a bit far fetched to me. It seems more likely that people would trade in local currencies. Maybe, I suppose. Reserve confiscation is something that the central banks have to worry about more directly and they tend to be gold holders.

fuoqi 2y ago
>It seems more likely that people would trade in local currencies Use of local currencies is certainly on the rise, but the problem is lack of bilateral financial trust caused by various factors, including capital controls. There is the recent example of Russian companies being unable to get rupee-denominated profits out of India, they had either to buy something from India or invest money there. China is also quite strict with its onshore RNB flows which is multiplied by risks of secondary US sanctions. Honestly, I am really surprised that BRICS+ countries haven't yet developed a gold-based settlement system centered around central bank reserves. My main guess: such system would work fine with a more or less balanced trade, but many countries intentionally pursue the export-oriented model, which would work poorly with such system.
- throwaway290 2y ago
  BRICS currency will not happen because China holds all the cards while keeping RMB non convertible. It's a charade with the only goal to piss of US a bit
  - JumpCrisscross 2y ago
    > BRICS currency will not happen because China holds all the cards More than that, like half of the BRICS have threatened to shoot at or actually shot at each other in the last decade [1]. A BRICS currency is like America proposing a currency union with North Korea. [1] https://en.wikipedia.org/wiki/BRICS https://en.wikipedia.org/wiki/BRICS Egypt & Ethiopia, UAE & Iran, India & China, et cetera
lazide 2y ago
Physical gold is a common middle and upper middle class method of transferring internationally and protecting wealth. (Feel free to read that as tax evasion or money laundering - in these situations it’s often a matter of perspective) If you’re trying to do it with millions of dollars equivalent, it’s not great but functions. $100k+? Very common, and remarkably easy compared to other options. During times of great social upheaval and war, it’s often about the only option that works historically. It doesn’t really help the ultra wealthy as much, unless you’re talking nations during wartime type situations, due to physical logistics and security problems. And the poor can’t afford anything anyway, so this kind of thing isn’t exactly a problem for them.