14:56 GMT +321 November 2019
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    In this Tuesday, July 22, 2014, file photo, gold bars are stacked in a vault at the United States Mint, in West Point, N.Y.

    Gold-Backed Ruble Could Become Game Changer for World Monetary System - Scholar

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    While the United States continues to ramp up sanctions against Russia, Moscow keeps building up its gold reserves, which have already quadrupled since 2008 and currently amount to nearly 2 thousand metric tons.

    Commenting on the recent reports about Russia increasing its gold reserves, Thorsten Polleit, Honorary Professor of Economics at the University of Bayreuth and co-founder of an Alternative Investment Fund, told Sputnik that “holding gold is certainly a smart route to take” for a country that seeks “a hedge against the demise of the US dollar” or wants to decrease its dependency on the US currency.

    "If Russia decides to back the Ruble with gold – this could be a truly powerful game changer for the world’s monetary system!" he declared.

    Polleit noted however that in the current situation he cannot see the US dollar’s status as the world’s leading currency being challenged “by any other unbacked paper currency in the near future.”

    "The world’s financial system is de facto ‘dollarized’; there is still great demand for the Greenback motivated by financing and transaction purposes. I am even inclined to think that in a true world financial crisis, the US dollar would be ‘the last man standing’ in the universe of unbacked paper currencies," Polleit explained.

    Earlier, Die Welt announced that Russia actively seeks to get rid of dependency on the US dollar by purchasing gold and selling the bulk of the Moscow-owned US Treasury bonds.

    According to political advisor and author James Rickards, cited by the newspaper, the Russian government pursues “a strategic plan” aimed at protecting the country from "dollar sanctions" by building up Russia’s gold reserves.

    READ MORE: Russia Has 'Good Reason' to Bet on Gold Amid US Sanctions — Veteran Trader

    June 2018 figures from the Russian Central Bank also show that the country's gold reserves have risen to nearly 2,000 metric tons, quadrupling since 2008 and coming to constitute over 17% of the country's total foreign reserves.

    Russia's gold reserves rose by 106 tons of gold in the first six months of 2018 to a total of 1,944 tons, with Moscow offloading some $77 billion-worth of its US Treasury bills, bonds and notes in the same period, thereby dropping out of the top 33 major holders of US securities.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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