Russia Trade and Gold

Folks,

This tidbit represents an interesting change... the Russian currency is a
mess, so the Russians have reintroduced an older parallel currency. With the
dollar possibly inflated as an asset, and the economies of the world in a
likely recession, a gold standard currency would be a very good move. Gold
is at historic lows in price, and the Russians likely have half the worlds
gold supply. They could easliy make a gold standard currency work. Currency
and credit are the two most potent means governments have to get into
mischief, and the Russians are in a position to, as Geo. Soros says, punish
foolish government policies.

Russia's Alternative to Dollar


(Kommersant)


The Chervonets makes a comeback
by Elena Kiseleva issued on 04.07.01

The Chervonets, the replica of gold coins that circulated in Russia in the
1920s, has made a historic comeback after the Bank of Russia put them in
circulation on Tuesday. The Chervontsi that have cluttered the shelves of the
Bank of Russia's depository since the 1980 Moscow Olympics have been
declared to be a legitimate payment means on the territory of Russia together
with coins issued after January 1, 1998. As a result, Russia has got a new
financial instrument that may soon become a serious alternative to the U.S
dollar.

Kommersant reports that the new Chervonets replicates the gold coins
that circulated in Russia in the 1920s, the ones that were used for the
Soviet gold standard and were meant exclusively for foreign
settlements. The new Chervontsi were issued before the 1980 Moscow Olympics.
The authorities thought that foreign guests would buy the coins as souvenirs
but miscalculated.

Most foreigners were indifferent to the chervontsi.
After the Olympics, the Bank of Russia placed the Chervontsi in its
depository and it's only today that its chairman, Viktor Gerashchenko, has
found a new use for the coins.

Until recently, Russian gold and silver coins have
been of interest only to collectors and to bureaucrats trying to convince
the Russians of the need to return to the gold standard for the last three
years. But it is only now that the Chervontsi are turning into a
full-blown circulative currency, which the Russians may soon choose as an
equivalent for personal savings instead of the U.S dollar.

The Bank of Russia initiative has been fully
supported by Russian banks. However, some difficulties lurk. "In order for
the project to be fully launched, the Bank of Russia has to work out a
daily sell-and-buy mechanism to establish reverse links with the market,"
Sergei Zaichenko, deputy chief of the Treasury at the Russian Bank for
Foreign Trade (Vneshtorgbank), told Kommersant. The Bank of Russia is now
preparing such a project, Kommersant said.

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