Russia's government could use its gold to bolster the falling ruble: ex-Deutsche bank and ex-Lehman brothers executive
Rumors last week that Russia was on the verge of selling its gold reserves were quashed with the news on Friday that it has continued to add to its holdings.
However, John Butler, chief investment officer at Atom Capital, and Alasdair MacLeod, the head of research at online bullion exchange GoldMoney Foundation, believe that Russian President Vladimir Putin could bring the country onto some sort of "gold standard" to try to shore up its economy.
"It was (and still is) in Russia's power to adopt a gold standard," MacLeod told CNBC via email.
"There is no doubt that Russia and China, plus the other Eurasian states in their sphere of influence are all accumulating gold and the indications are they see it as central to replacing the U.S. dollar for cross border trade."
Whether Russia would actually decide to do it was another matter, said MacLeod, and expected the country's central bank to the lack the courage to act. However, he said that if Putin is "provoked sufficiently" he may judge it to be in Russia's best interests and could overpower any reluctant officials at the bank.
Dec 23 (Reuters) - Russia raised its gold reserves for the eighth month in a row in November, while Ukraine reduced its bullion holdings for a second straight month, according to International Monetary Fund data released on Tuesday.
Russia, the world's fifth-largest holder of bullion reserves, raised gold holdings by 18.753 tonnes to 1,187.493 tonnes last month.
Part of the increase comes as Russia's central bank has been forced to step up buying from domestic producers hurt by Western sanctions following the Ukraine crisis, Reuters reported earlier.
About John Butler:
Alasdair Macleod wrote on 28 November 2014 on his site:
'The successful remonetisation of gold by a major power such as Russia would draw attention to the fault-lines between fiat currencies issued by governments unable or unwilling to do the same and those that can follow in due course. It would be a schism in the world’s dollar-based monetary order.