What can the recent crash of the Russian ruble teach us about gold ownership? Dmitriy Balkovskiy, a Russian coin dealer in Moscow, has some insight.
On December 16, 2014, a day deemed the “Russian Black Tuesday”, the ruble dropped from 58 to 72 per U.S. dollar. In an article for Casey Research, Balkovskiy recalls some incidents he witnessed that day and uses them to make his case for gold ownership, which he calls a habit in “personal fiscal hygiene”:
- A Ukrainian construction worker came into his office on the day of the crash to purchase a 1-oz. Austrian Philharmonic gold coin. The man insisted the coin be meticulously checked for authenticity, a process which took about 30 minutes. When he entered the shop, the coin was selling for about 86,000 rubles. Just 30 minutes later when the inspection was complete and he was ready to purchase the coin, its price had risen to over 100,000 rubles. The man had only 90,000 rubles on him. As Balkovskiy puts it, “The coin had literally slipped from his grasp.”
- Balkovskiy went a nearby bank that day and saw it full of about 100 customers desperately trying to convert their rubles to U.S. dollars and euros.
- A friend told him “I’ve got to buy euros to pay my rent (rents are often fixed in euros in Moscow), but any exchange office I go, they have run out of euro cash.”
Russians view U.S. dollars, euros, and even flatscreen TVs as better hedges against crisis than gold, and shrug off buying gold for protection – sentiments Balkovskiy bemoans.
“It is both painful and funny to see Russians repeating the same mistake again and again,” he writes.
His examples demonstrate that in the event of a sudden economic crisis, when it comes to safeguarding the value of your assets, time may not be on your side. The gold price may rise quickly as investors scramble to purchase gold as a safe haven, making it more costly and difficult to purchase than it would be otherwise.
Despite many Russians’ dismissive attitudes toward gold, Balkovskiy still has hope for a gold bull market in Russia. “The concept of precious metals ownership is slowly seeping into psychological makeup of Russian businesspeople,” he writes. He notes that bulk buyers suddenly began coming into his shop and purchasing large quantities of gold after the ruble crash, “looking to ‘deep freeze’ their savings for the long term.” He thinks loss of trust in Western currencies will help as well. He also speaks of the “savings-oriented mentality” many Russians have, and how gold nicely fits into this line of thinking.
He closes with the following call to action:
It’s time for Russians, Americans, and everyone else to wake up, face up to the dangers of statist debauchery, and prepare ourselves for the hard times to come!
American Bullion agrees that it is wise to protect your assets with physical gold before a crisis hits. Currencies may collapse, but gold will always be gold. Call us today at 1-800-326-9598 to purchase gold coins or bars for secure direct delivery, or add physical gold to your retirement account. You may also request a Free Gold Guide by submitting the form at the top of this page. We will handle all of the details for you and ensure the process is 100% safe, quick, and hassle-free.
Piece of gold, peace of mind.