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Russian Gold Boycott Effect

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Author Previous TopicReplies: 3 / Views: 493Next Topic  
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United States
436 Posts
 Posted 06/26/2022  11:22 am Show Profile   Bookmark this topic Add howell1018 to your friends list Get a Link to this Message
Anyone want to hazard a guess as to what effect the Russian gold boycott will have on the price of gold in the near term, if any?
My guess is that it will send the price higher. If my past prognostications are taken into account the price will now drop like a stone, or at best, lie flat.
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14507 Posts
 Posted 06/26/2022  7:04 pm  Show Profile   Bookmark this reply Add Sap to your friends list Get a Link to this Reply
I think it should have minimal impact on the global gold price.

1. Russia produces less than 10% of the world's current gold production.

2. Most of the major global gold buyers - including China, India and Turkey - are either allies of Russia or neutrals and would not be joining the boycott.

3. Gold is fungible; Russian gold is chemically and physically identical to anybody else's gold, it's not superior or inferior in any way, and not even distinguishable without really high-tech equipment to fingerprint the trace contaminants. They will simply find buyers who aren't boycotting them, so I doubt they will need to offer much of a discount. Those buyers can then on-sell the laundered gold to boycotting countries, and there's no way anybody can tell it's "Russian gold" after that.

4. Most of the gold Russia has been making for the past few years has gone straight into the national stockpile, rather than being sold abroad. Selling the reserve would be a last-resort tactic, since it's the existence of that reserve that's preventing the rouble from freefalling completely.

Of course, what "should" happen and what actually happens are rarely causally linked. Humans are not known for absolute rationality.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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70322 Posts
 Posted 06/26/2022  7:51 pm  Show Profile   Bookmark this reply Add Coinfrog to your friends list Get a Link to this Reply
Minimal effect, even less than the other hapless sanctions already imposed. Russia will easily find a market for its gold, just like its oil. Meaningless response from the West.
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United States
2561 Posts
 Posted 06/27/2022  09:10 am  Show Profile   Bookmark this reply Add thq to your friends list Get a Link to this Reply
Not nearly as much as central banks increasing interest rates. That has the effect of depressing all commodity prices. Which is the whole point of doing it.
"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
06/27/2022 09:12 am
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