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Russian Ruble weakness has hampered Gold

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Don’t ignore the Ruble, in your Gold analysis… RUB-6-mos

RUB_zps48099978.gif

Here’s the mechanism:

+ EU and the US impose sanctions (announced 17-June)

+ Russian co’s and banks cannot borrow USD and other hard currencies

+ Russian co’s scramble to get hard currency to meet obligations

+ Ruble falls to 39.85, rather than R-36 per USD, as is “justified” by lower oil price

+ Russian banks and co’s have to sell some of their gold holdings, to get needed currency

DrBubb, on 07 Oct 2014 – 10:26 AM, said:

Ruble is down… with Oil

RUB vs. OILB/brent and USO/usOil … update / RUBusd: $0.0252 / USDrub: R-39.85

Ruble-vsOILB_zpsf62879a3.gif

Per the WSJ:

“Official data suggest the (Russian) central bank spent at least $700 million from its reserves

to limit the Ruble’s slide last week.”

“Ruble hit by… capital flight, an economic slowdown, and Western sanctions… as oil has tumbled.”

“Local demand for hard currencies… as banks and companies have limited access to external borrowing,

due to Western sanctions.”

Oleg Kouzmin, chief economist at Renaissance Capital in Moscow, said:

“The fair ruble price for oil between $95 and $100 a barrel stands at around 36 rubles per dollar.”

It has occurred to me that the Russians may have sold some of their gold, to get the funds

they need to buy Rubles.

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