will Russia change gold market? #ChartOfTheDay

A while ago, Ghana claimed to buy refined products for gold instead of US dollars. Small changes in the local African market are a step in the right direction to overthrow the ‘all-mighty dollar’ from the world market. But now, after the G7, EU and Australia announced a price cap on Russian oil, President Putin may be able to double the gold price! This article is part #ChartOfTheDay series.

 Vladimir Putin recently requested a gram of gold for every two barrels of crude oil! The price cap is set on $60/barrel, but that offer is two times cheaper! It’s another manoeuvre, after Russia claimed that it would not accept the price cap and would not sell crude oil to countries that supported the price cap.

Russia exports roughly 8 million barrels of crude oil every day. It accounts for approximately 8% of global demand. Accepting gold for crude oil by Russian exporters probably won’t change the oil price itself, but it could easily raise the gold price above $3500 per ounce!

Russia’s gold reserve (2 298.53 tonnes in Q3 2022) would increase in value, as well as gold mining companies would get better profits from higher than ever gold prices.Most gold comes from Africa (981,1 tonnes in 2021), second region is Asia (596,1 tonnes in 2021) with top producer: China (332,0 tonnes in 2021), third place is Commonwealth of Independent States with 558,0 tonnes of gold in 2021. Commonwealth of Independent States (CIS) members are: Russia (330,9 tonnes in 2021), Uzbekistan, Kazakhstan, Kyrgyzstan and others. USA gold production was 186,8 tonnes in 2021.

Furthermore, double gold price could create a problem for western banks, which hold gold futures, as the ‘paper gold market’ is multiplied by the real gold available in the world, including one that is still to be mined in the future.