Perfect Alternative to the Dollar: Is It Time to Invest in Russian Gold?

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MOSCOW, Russia – Russian gold could become the perfect alternative to conservative dollar investments, according to Aleksander Afanasiev, executive director of the Moscow Stock Exchange (MOEX).

“We are going to offer an alternative to the US dollar in the form of the gold we produce,” Afanasiev said during his speech in the State Duma (lower house of the Russian parliament). He said that the action of “superconservative” investors to buy dollars and keep them at home is not a safe option.

The director of the Moscow Stock Exchange also underlined that in recent years more and more Russians have opened investment accounts, which means that the financial education of the population is improving.

Russia is the third largest gold producer in the world. According to the country’s Ministry of Finance, in the first ten months of 2018, Russia produced about 285 tonnes of gold.

The Central Bank of Russia bought a record amount of precious metal in 2018 and currently holds a total of 2,112 tonnes of gold – the highest figure in the country’s modern history. At the same time, Russia reduced the share of the dollar in its international reserves to less than half.

The process of reducing the share of the dollar in Russian reserves was actively launched in April 2018, when the US introduced harsh sanctions against Russian companies. In 2018 the Central Bank of Russia sold almost all US Treasury bonds.

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However, crypto-currency expert Nick Szabo, considered by some as the possible anonymous creator of bitcoin, said many central banks tended to opt for crypto-currency to diversify their reserves.

The prominent programmer suggested that by 2019 the crypto-coins could become an alternative to traditional assets in central banks’ international reserves around the world.

During his speech at the Bitcoin Summit at Tel Aviv University, Szabo said that in certain situations, central banks can not have full confidence in the foreign debt securities of foreign countries.

“One solution is to entrust the money to the Swiss government, but this is not a low-risk option. The Swiss government itself may also be under political pressure, so the possibility of minimal risk is the crypto-currency,” he explained.

In this context, Szabo criticized some other traditional ways of supporting capital. In particular, talking about gold, the expert recalled the European reserves of precious metal stolen by the Nazis in 1938.

The expert warned that the first to accept the crypto-coins as reserve assets will be countries whose currency has been devalued or those facing high inflation.

In addition, he referred to countries that are under pressure from foreign governments or are subject to economic sanctions.

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