Is the Russian Ruble Linked to Gold?
Is the Russian Ruble Linked to Gold?
Separating fact from fiction in the misinformation surrounding Russia's monetary policy and gold standard claims
Key Takeaway
No, the Russian ruble is not linked to gold. Despite claims from some gold commentators, Russia's Central Bank has not established a gold standard. This article examines the facts behind the misconception and analyzes what actually happened with Russian gold policy in 2022.
In the fog of war, the first casualty is often the truth, and the conflict between Russia and Ukraine has been no exception. Information coming from either side about military, political, or financial developments should be treated with skepticism. Among the most persistent misconceptions has been the claim that Russia linked its ruble to gold, effectively creating a modern gold standard.
Timeline of Events: What Actually Happened
War begins between Russia and Ukraine, causing an initial steep devaluation of the ruble as international sanctions take effect.
The Central Bank of Russia (CBR) announced it would buy gold from Russian credit institutions at a fixed price of 5,000 rubles per gram. However, the prevailing free market price was 6,000 rubles per gram, making CBR's offer economically unattractive to sellers.
The ruble reversed course and began appreciating, likely due to incoming euro payments for gas being exchanged into rubles at Gazprombank, one of the few Russian financial institutions not sanctioned. This caused gold prices denominated in rubles to decline.
The ruble-denominated gold price hit exactly 5,000 RUB/gram, temporarily creating the appearance that CBR was successfully pegging the price.
CBR announced the suspension of gold purchases at a fixed price, stating: "Due to a significant change in market conditions, the Bank of Russia is making adjustments to its pricing policy when carrying out operations to purchase gold from credit institutions. From April 8, 2022, the purchase of gold by the Bank of Russia will be carried out at a negotiated price."
Debunking the Gold Standard Myth
Myth: "Russia has just linked the ruble to gold at a rate of 5,000 rubles to one gram of gold." - Jim Rickards, May 3, 2022
Reality: This claim is demonstrably false. The CBR explicitly announced the suspension of fixed-price gold purchases on April 8, 2022 - less than two weeks after the program began.
The evidence against a ruble-gold link is overwhelming. As the ruble continued strengthening after April, the ruble-denominated gold price kept falling. If CBR were truly pegging gold at 5,000 RUB/gram, this would be impossible.
Initial CBR Offer
RUB/gram (March 28, 2022)
Free Market Price
RUB/gram (March 28, 2022)
Current Price
RUB/gram (as of article writing)
Additional confirmation comes from Russian gold dealer Sberbank's pricing on May 11, 2022, where clients could buy gold at 4,567 RUB/gram and sell at 3,709 RUB/gram, with a mid-market price of 4,138 RUB/gram - closely aligned with international gold price data and far below any supposed 5,000 RUB/gram peg.
Conflicting Official Statements
Adding to the confusion, there was a statement from the Kremlin on April 26, 2022, about backing the ruble with gold and commodities. However, this was refuted by the CBR just three days later, highlighting the lack of coordination and the speculative nature of such claims.
Analysis
The disconnect between various Russian officials demonstrates the experimental and ultimately unsuccessful nature of attempts to establish any meaningful gold-ruble linkage. Strong evidence and official confirmation should be required before accepting claims about major monetary policy changes.
The Future of Gold Standards
While Russia has not established a gold standard, the broader question of returning to gold-backed currencies remains relevant. Financial analysts, including Credit Suisse's Zoltan Pozsar, have written about the potential emergence of a new international monetary order where gold's role could increase substantially.
The ongoing economic uncertainties and currency volatility that make gold attractive to investors also fuel speculation about official monetary reforms. However, implementing a true gold standard requires significant economic restructuring and international coordination that has not materialized.
Conclusion
The claim that Russia has linked the ruble to gold is definitively false. The Central Bank of Russia's brief experiment with fixed-price gold purchases lasted less than two weeks and was explicitly terminated in April 2022. Current market prices for gold in rubles continue to fluctuate independently, demonstrating no peg exists.
This episode serves as a reminder of the importance of verifying information, especially during times of geopolitical tension when misinformation spreads rapidly. For investors interested in gold, understanding these distinctions helps separate legitimate market drivers from unfounded speculation.
Key Lesson
Always verify claims about major monetary policy changes through official central bank communications and observable market data. Market prices and official statements provide the most reliable indicators of actual policy implementation.