Ruble Pegged to Gold? A LinkedIn Post Sparks Drastic Controversy

Fazzaco has observed a relatively controversial LinkedIn post, published by a self-claimed UK-based retired property consultant who goes by the name Afshan Iqbal. The post has over a thousand comments at the time of writing.

Click to view the post on LinkedIn

"It's official! Russian Central Bank announces that the ruble is tied to gold!"

About some 20 hours ago, a LinkedIn user named Afshan Iqbal published a post on Russia pegging ruble to gold. The article has demonstrated a strong pro-Russia sentiment between the lines.

The Central Bank of Russia, according to the user, has officially announced that the Russian ruble will be tied to gold as of March 28, 2022, The rate is 5,000 rubles per gram of gold ingots. And since there are 28 grams in each ounce, that means 140,000 rubles per ounce.

The USD/RUB rate is 1:100 (the actual rate should be somewhere around 1:83.5, according to the latest forex rate on April 12). She did the math and found out that every ounce of gold equals 14k rubles and 1,400 dollars, instead of the actual Gold/USD price, which is 1,928 USD.

Based on the above, Afshan made a conclusion that by doing so, Putin just wiped out about 30% of the US Dollar worldwide when it comes to gold ingots. As a result, people all over the world are literally throwing their money on the ruble and throwing away dollars and euros to do it.

What Russia just did is the financial equivalent of detonating a nuclear bomb. Last time a guy on this planet who tried to support a currency with gold was Muammar Quadaffi of Libya. What he got in return was the invasion from NATO, who took him out and planted a bullet in his head.

Last week, Russia announced that only ruble is accepted to purchase its oil and gas. That means the oil and gas produced from Russia will be tied down to gold as well. The result? Europe has to buy rubles from Putin with gold, or even buy oil and gas with gold itself.

Afshan said that we'll see a MASSIVE price disturbance in the FOREX markets. Meanwhile, countries holding US dollar debt notes as a reserve will see an immediate and much less use for them and want to start unloading them in favor of something more stable. Japan, for example, will start unloading their dollar debts as soon as possible and move to more stable currency like the ruble.

An industry-wide controversy

The post drew comments from LinkedIn users across all walks of life in just a few hours. The comment section becomes loaded with fierce discussions where people posted opposing comments one after another. Most of the comments are left by those who have a financial or investment backdrop. Fazzaco hereby quotes the following comments.

Eran Shlomo, the CEO at Dataloop.AI, an Israel-based data management company. With a technical background, Eran used to work at Intel Group for over 13 years. He commented, "the big news are much smaller than it seems," but he agreed that the Russia-Ukraine war is slowly crawling deeper into the core of the conflict, and that is USD being the global reserve currency.

Salesmsg is a fintech firm based in Florida, U.S. The co-founder, CTO and CPO, Sergey Sundukovskiy expressed his political opinion in his comment, "hopefully Putin repeats Quadaffi's destiny. All dictators end up the same way," he also bashed Afshan fiercely, saying that she should be ashamed of herself.

Afshan struck back, "I take it you are all in favour when millions are killed by so called democracies under the disguise of spreading human rights as in Iraq, Libya, Afghanistan, Syria…"

Andrii Demchyshyn, Vice President at BMO Capital Markets, a Canada-based investing bank, offering services for institutional and government clients, believed that such "act" from Russia is a very illiterate propaganda, because contracts says payment has to be in euros, and thus Russia will get pay in euros, otherwise contract will be voided. Besides, such desperate move to tie rubble to gold to give it any value won't work, because it has none. Unless someone who wants to buy gold from Russia, but you will need to deliver it out of Russia to perspective buyers, and it is not that simple and also has costs and there are or will be sanctions in place to stop it.

"[The move] won't last long, nobody is going to unload debt in stable dollars tied to powerful US economy."

Moreover, someone pointed out a question, how much gold does Russia even have? The country won't allow a third party to investigate it.

A trolling account? Let's dig out the real story behind it

As far as Fazzaco has learned, Afshan Iqbal could be a trolling account because you'll find very little contact info and experience in the user’s LinkedIn page.

Someone in the comment section, too, pointed out that the official announcement of pegging ruble to gold is perhaps a fake news. According to the latest press release from the website of the Bank of Russia, the bank decided to buy gold from credit institutions at a fixed price starting from 28 March 2022 in order to balance supply and demand in the domestic market of precious metals. The fixed price is 5,000 rubles per ounce of gold. Meanwhile, it is only temporary.

It can be seen that the controversy could be sparked by a trolling post. But we can see that the continuing Russia-Ukraine conflict has been taking a toll indeed on the finance industry in general.