Russia's ruble has rebounded in recent weeks, as the Kremlin patched together an aggressive defense of its fiat currency.
The ruble was valued (vs. the U.S. dollar) at 80.41 on February 23, the day before Putin’s invasion. It skyrocketed to 131.50 on March 7. It plunged to 90.72 on the Ides of March (the 15th). And it opened today at 94.75.
Matt Phillips reports that Moscow’s latest attempt to shore up support came in the form of a direct demand from His Rogueness (Putin) that the EU pay for natural gas with rubles instead of dollars or euros.
It's a not-so-veiled effort by Russia to create demand for its struggling currency—with the ruble jumping 8% on the news.
Widespread sanctions imposed after Russia's invasion of Ukraine in late February have hammered the ruble, wiping out 90% of its value against the dollar at times.
Moscow took measures—like doubling interest rates, halting currency trading, and demanding that Russian companies exchange their foreign earnings for rubles—that slowed the bungie jump and prevented a crash.
But Putin's latest scheme has already been called a breach of contract by Germany, the eurozone’s largest buyer of Russian natural gas.
If the breach prompts a full rupture with Europe, which buys 40% of its gas from Russia, the ruble will likely take another tumble.
Such a break, however, would also make Europe's energy crisis a lot worse. To wit, European natural gas prices jumped 30% after Putin made his latest demand.
By Dave Allen for Discount Gold & Silver
Russia's ruble has rebounded in recent weeks, as the Kremlin patched together an aggressive defense of its fiat currency.
The ruble was valued (vs. the U.S. dollar) at 80.41 on February 23, the day before Putin’s invasion. It skyrocketed to 131.50 on March 7. It plunged to 90.72 on the Ides of March (the 15th). And it opened today at 94.75.
Matt Phillips reports that Moscow’s latest attempt to shore up support came in the form of a direct demand from His Rogueness (Putin) that the EU pay for natural gas with rubles instead of dollars or euros.
It's a not-so-veiled effort by Russia to create demand for its struggling currency—with the ruble jumping 8% on the news.
Widespread sanctions imposed after Russia's invasion of Ukraine in late February have hammered the ruble, wiping out 90% of its value against the dollar at times.
Moscow took measures—like doubling interest rates, halting currency trading, and demanding that Russian companies exchange their foreign earnings for rubles—that slowed the bungie jump and prevented a crash.
But Putin's latest scheme has already been called a breach of contract by Germany, the eurozone’s largest buyer of Russian natural gas.
If the breach prompts a full rupture with Europe, which buys 40% of its gas from Russia, the ruble will likely take another tumble.
Such a break, however, would also make Europe's energy crisis a lot worse. To wit, European natural gas prices jumped 30% after Putin made his latest demand.
Moex Reopening a Big Bummer
The tenuous status of the ruble comes as Pam and Russ Martens write that today’s reopening of the Russian Stock Exchange (the MOEX) for stock trading was little more than an exercise in humility...er, make that humiliation.
When the Martens say the trading that ensued was “stage-managed,” they’re not being hyperbolic.
The Moex, which had been closed since crashing as much as 45% on the day of the invasion, was shortened to a four-hour trading session.
Foreigners weren’t allowed to sell any shares. In fact, only 33 Russian companies were allowed to trade—just 15% of listed shares. Short-selling was banned.
The Martens report that even with $10.3 billion in support from Russia’s National Wealth Fund, the major beneficiaries of trading today were the country’s largest state-owned energy companies.
Energy companies Rosneft closed up 17%, while Gazprom closed with a gain of over 13%.
Other Russian shares, however, weren’t getting so much love. Russia’s largest bank Sberbank closed with a gain of just 4% while VTB Bank lost 5.4% by the close, after being down double digits earlier in the session.
The Russian airline Aeroflot lost a whopping 16.4% after being down as much as 20% during intraday trading.
When it comes to gold prices, stagflation fears are starting to outweigh the expectations of a tighter Federal Reserve.
So says Singapore's United Overseas Bank. The bank's latest outlook on gold also comes with new price projections for the year.
It says the key drivers for gold will continue to be inflation fears, slower economic growth, and increased demand for safe havens.
Two weeks ago, gold climbed toward record highs, testing the $2,070 level. The move came after the U.S., the EU and others announced broad sanctions against Russia, including an American oil import ban.
The UOB also noted that investors are also more inclined to allocate more towards gold right now. Increased demand for gold has been in the form of both ETFs and physical.
The bank believes purchases of gold jewelry by individual investors will likely intensify along with global central bank diversification of their reserves into gold.
There will also be more demand from central banks, the report added. "Various central banks, particularly in the Emerging Market space, continue to diversify their reserve holdings into gold.
“It is likely that this onset renewed geopolitical risk due to the Russia-Ukraine conflict will reinforce this diversification trend."
The bank's updated pricing scenario has gold trading at $2,100 an ounce in the 2nd quarter, $2,150 in the 3rd and $2,200 by the end of the year.
The bank said, "The ongoing rise in energy and commodities prices will be keenly felt in economies across the world in the months ahead as inflation rises further and growth slows down concurrently… and safe-haven inflows to gold take over as a key dominant driver."
Long story short: Don’t wait for gold and silver to surge to the next level; consider adding more to your portfolio now to lock into today’s prices.