Sorry for the headache but Russia seeking to price its energy exports in gold has the potential to be highly disruptive for global currency markets. Let's go through the math
According to IBISWorld, the dollar value of E&P worldwide in 2021 was about $2.1T. This excludes transport, refining and a lot more but $2T is only going to grow as our demand grows. (And yes, demand for hydrocarbons will grow at least for a few more decades.) VisualCapitalist.com has estimated the worlds total gold value at $12.5T in the fall of 2021 or closer to $13.5 T today. So just think about this relationship, one year of E&P vs total of worldwide gold. If this really happens, how will this impact the price of gold? Furthermore, while DXY remains strong for the time being, imagine the impact on the dollar.
Haven't heard much about this so many thanks Craig. Love your work.
Russia may peg gold to oil, but not many markets willing to buy it anyways besides Chindia - which looks like alternate sanctions will affect those two countries - further alienating Russia. Also, TPTB won't allow Russia to exit this because they NEED the bear to strike back so they can blame our economy's demise on them - so expect them to push max pain on to Russia. Only way to do that is hike interest rates and send paper gold down hoping market participants will liquify their gold holdings and cause a cascading ripple effect.
According to IBISWorld, the dollar value of E&P worldwide in 2021 was about $2.1T. This excludes transport, refining and a lot more but $2T is only going to grow as our demand grows. (And yes, demand for hydrocarbons will grow at least for a few more decades.) VisualCapitalist.com has estimated the worlds total gold value at $12.5T in the fall of 2021 or closer to $13.5 T today. So just think about this relationship, one year of E&P vs total of worldwide gold. If this really happens, how will this impact the price of gold? Furthermore, while DXY remains strong for the time being, imagine the impact on the dollar.
Haven't heard much about this so many thanks Craig. Love your work.
Russia may peg gold to oil, but not many markets willing to buy it anyways besides Chindia - which looks like alternate sanctions will affect those two countries - further alienating Russia. Also, TPTB won't allow Russia to exit this because they NEED the bear to strike back so they can blame our economy's demise on them - so expect them to push max pain on to Russia. Only way to do that is hike interest rates and send paper gold down hoping market participants will liquify their gold holdings and cause a cascading ripple effect.