Alasdair Macleod: Russia's monetary solution

Russia's best strategy in the currency war being waged against it by the West may be link the ruble to gold, GoldMoney research Alasdair Macleod writes today.

Macleod writes: "By adopting a gold exchange standard Russia is almost certain to raise fundamental questions about the other G20 nations' approach to gold, and to set back western central banks' long-standing attempts to demonetise it. It could mark the beginning of the end of the dollar-based international monetary system by driving currencies into two camps: those that can follow Russia onto a gold standard and those that cannot or will not. The likely determinant would be the level of government spending and long-term welfare liabilities, because governments that leech too much wealth from their populations and face escalating welfare costs will be unable to meet the conditions required to anchor their currencies to gold. Into this category we can put nearly all the advanced nations, whose currencies are predominantly the dollar, yen, euro and pound. Other nations without these burdens and enjoying low tax rates have the flexibility to set their own gold exchange standards should they wish to insulate themselves from a future fiat currency crisis."

Macleod's commentary is headlined "Russia's Monetary Solution" and it's posted at GoldMoney here:

http://www.goldmoney.com/research/analysis/ru...-solution?gm...