HOW MUCH GOLD IS NEEDED FOR RUSSIA?

With the monetary mass circulating in the country that is officially evaluated at 6.6 trillion rubles or roughly 200 billion dollars, this 1/6 or 1/7 amounts to about 30 billion or not more than one fifteenth of its annual export or already accumulated foreign currency reserve.

 At the present retail prices for the metal on the world exchanges, this amount would be like acquiring around 750 tons of the metal.

But we don’t need to acquire anything.  Such a mass of it and even more—1000 tons –is already in our country which, moreover, remains one of the leading countries in the reserves of this metal underground and in its extraction—more than 200 tons a year.

Therefore, Russia already now has enough of this metal for all its money to be determined in freely circulating, freely sold and bought gold units of value.  Moreover, this will preserve hundreds of tons of metal for reserve functions and emergencies.

The quick growth of the monetary base can be ensured only through its own extraction of metal, which is very important since the world dollar system is on the verge of a default.
            After turning two hundred tons of such gold with a Russian “home address” into 200 million gold banknotes each containing a gram of the precious metal, they will be worth about 400 billion rubles.

But so that the new banknotes containing gold don’t remain a heavy non-liquid “solid monetary mass”, and the mechanism of the free equivalent exchange of gold banknotes for soft paper money works (see the scheme on fig.7), the state will have to print enough of the regular paper rubles to equal 6-7 times their value for the following purchase of the gold units by the population.

But the issuing of these paper rubles won’t be a primitive emission or attenuation of the currency.  This will be a legal and backed by gold--with free exchange for it—growth of the monetary mass, a balanced “gold package of sufficiency” of the national money guaranteeing an absolutely different monetary state of the country.  And this state could never be one of devaluation or inflation.

  

Fig.7. The growth of money supply 

The new paper money can be freely converted into gold banknotes in the framework and boundaries of that “gold sufficiency” which is established when the balance for the demand for the gold containing banknotes is achieved. 

Thus, the country, as a result of its actions, will get a soft paper currency protected from inflation amounting to almost 3 trillion rubles.  That means that it can add another almost half of all the money in circulation to the money in the country while not fearing their devaluation.

Thus, in just 2 years it would be possible, thanks only to domestic gold mining, to increase the volume of the domestic monetary market in Russia two times, not even doing anything about the repatriation of its “stuck” currencies with the help of the corresponding “gold tranches” for the purchase of gold on the foreign market. 

This is the shortest path to restore the national financial sovereignty of the country and its independence.