Updated—What Russia Doubling Its Gold And Yuan Holdings Really Means
The comments below are an edited and abridged synopsis of an article by VBL
Russia’s Finance minister has announced that its National Wealth Fund (NWF) is now permitted to allocate up to 60% of its holdings in Chinese yuan and up to 40% of its holdings in gold bullion. This is a doubling in permitted allocation percentages, up from 30% and 20%.
Simultaneously, the NWF reduced its holdings of the British pound and the Japanese yen to zero.
Reuters reported from Moscow: “Russia’s finance ministry on Friday said the maximum possible share of Chinese yuan in its National Wealth Fund (NWF) had been doubled to 60% as it restructures its rainy-day fund to reduce dependency on currencies from so-called ‘unfriendly’ nations.”
The NWF was recently used to finance the widening budget deficit in 2022, due in no small part to sanctions by the G7. The Fund stands at $186.5 billion, according to Reuters.
Up for discussion: This is not temporary; stealing in Russia’s eyes; establishing the golden yuan and petroyuan; and the bottom line.
“Russia is buying gold and swapping some of it for yuan for trade and reserve diversification. It’s that simple. The yuan in turn is implicitly backed in part by gold. Russia does not act monetarily without China’s approval. It ends in protracted economic pain for all, or war now. We think the next western move financially is to break Russia by breaking oil. How that happens, who knows. But expect a ramp up in policy, tech, and rhetoric on the West’s side with regard to energy procurement and use in the coming year. Everyone has doubled down. Tripling down is next.”