The recent counterintuitive gold price raid has been part of a Federal Reserve driven anti-Russian psyops operation is likely to cause a ripple effect in the gold bar and coin space. The Federal Reserve is attempting to push back against the fresh 2023 launched Russian driven de-dollarizing physical gold weaponization mandate where Russia’s Sberbank was asked to tokenise gold for trade.

This purely US centric attempt to counter safe haven western market flows into gold bullion comes at the anniversary of the Russian incursion into Ukraine. However, the previous attempt back in March 2022 to swap unleveraged safe haven physical gold demand with a wall of highly leveraged paper gold backfired. This divergent condition incentivized the strongest competing central bank accumulation since President Nixon took the US off the gold standard over fifty years ago.

Central Bank gold bullion buying increases.

The surge in central bank demand caused the premiums on gold coins to spike internationally which was noticeable as London bullion companies hiked their price to sell gold sovereigns to multi-year highs in a bid to attract sellers into the market.

By November this unfactored competing global central bank physical gold demand was so large that it had breached the leveraged highly discounted London Bullion Market Association ringfenced paper wall. These unfactored physical gold outflows force an unwind of this ill thought through naked short sell orders which are paper gold orders, not physical gold orders.

The resulting synthetic meddling wrongfooted the Federal Reserve agent too-big-to-fail bullion trading banks who had to scramble to short cover very bad bearish bets made into the end of 2022 which bet against a gold price rise. Gold subsequently had its strongest January for over 10-years after these bearish bets were placed.

With the dollar-for-gold window reopened, Russia openly ramped up the de-dollarization process on the first trading day of 2023 which launched the much telegraphed but mainstream media suppressed golden Ruble free currency.

And while gold-for-oil and energy trade has been informally evident, this was the first formalized step to launch a non-dollar global settlement trade currency. By sanctioning the physical digitization of gold, Russia has cut out the fiat middleman, reintroducing physical gold as a medium of exchange.

Gold is not an ancient relic and will be a key part to global trade.

History books are likely to look back at this as the time in which the weaponization of physical gold took a whole new turn, opening a highly liquid non-dollar mechanism for the BRICS+ nations to be able to benchmark commodities, energy, and oil trade in a real physical supply/demand gold gram price.

Whilst we are witnessing the inception of the adoption of this golden Ruble free currency, we are just at the early stages. This new system is competing against U.S dollar hegemony which raised questions on the liquidity issues that a gold-backed currency would experience. However, this is likely to cause an upside revaluation of physical gold and silver prices.

Tokenizing physical gold as a settlement currency opens up the lion’s share of the $7,500 billion global oil and gas markets in addition to the global $5,000 billion commodity energy sectors to ultimately be priced in gold grams. The only issue with valuing these commodities in gold is the paper diluted gold price is too low.

Should this new gold backed free currency be adopted by two thirds of the unsanctioned globe, purely from a supply/demand perspective the gold price in U.S dollar terms will have to rise substantially. Its real value will increasingly be benchmarked on real goods and not the rapidly debasing dollars. 

More than 5,000 years of history shows us one-by-one, without exception, every unbacked fiat currency system collapse and gold is once more revealed as the only real fungible currency benchmark to exchange for goods. 

Gold as the golden constant through time

Even if we look back to the formation of the Federal Reserve in 1913, one ounce of gold bought 22 barrels of oil. Now 110 years later the same ounce of gold buys you 24 barrels of oil. Oil priced in gold has been basically flat after more than a century.

It is only when trying to benchmark commodities against a fiat currency that currency debasement is exposed. This time it is the U.S dollar’s turn to fall into oblivion. The Federal Reserve has chosen another ill-advised attempt to stem the dollar’s decline against gold in a bid to buy some time to try to impose central bank digital currencies on the remaining western populations. 

The Federal Reserve paper market psyops method backfired which reopened the gold window so this time the Federal Reserve is attempting to incorporate borrowed gold as a new component of its backfiring Russian sanction packages. This ill-thought through gold tampering event has limited to how many paper gold market speculators they can act as counter party to.

Industry experts report that it was the Federal Reserve that borrowed the reported 100 tonnes of gold from the Bank for International Settlements in January. The Bank for International Settlements had squared all their 500 tonnes of 2022 positions by December.

It is likely that the Federal Reserve did this in the belief that they could leverage these 100 tonnes to chart-paint gold prices lower as part of an anti-Russia sanction package as they know that gold is a weaponized tool. 

However, as is becoming obvious, all sanctions placed against Russia have had a severe blowback effect against the west, forcing Russia to forge a stronger relationship with the 3.8 billion members of the Shanghai Cooperation Organization.

Whilst the Federal Reserve has employed these 100 tonnes of borrowed Bank for International Settlements gold to drive the paper gold price down, it can only leverage this borrowed gold to the degree they can short cover this borrowed gold into sucked-in paper supply from the speculators. It is this supply that is reaching extremely oversold technical conditions.

Gold has now reached prices that conflict with unleveraged sovereign and central bank physical gold demand levels. This pushback against gold is going to backfire against the Federal Reserve. Given the scale of real China, Russia and India physical gold demand, this effort will backfire quickly as Basel 3 compliant gold is demanded to be delivered as liquidity providers now have to have the physical gold reserves on hand.

There is a strong probability that gold prices will begin to correct to the upside and blow through previous record highs against the U.S dollar. Investors can front-run this movement by buying as many ounces of gold bars and coins as they can which is why leading bullion companies are starting to increase their gold buyback rates because demand for physical gold is becoming stronger under these paper gold prices.