Episode Details

Russia has been buying military drones from Iran and it has been paying for them with gold. 

This story seems to have gone largely unnoticed, but for those of us interested in the developing narrative that is de-dollarisation, this story has ramifications. 

A quick word about gold and national currencies

We all know gold retains its role as store of value - otherwise central banks would no longer keep it, nor would ETFs be a thing. This is never going to change, by the way. Gold has always been and will always be used as a store and display of value. 

But gold has never been much of a medium of exchange, except for high value transactions. This role usually fell to silver and other metals. Under the classical gold standards of the 19th century gold did find some use. The old pound coin - aka the sovereign - was 22 carat gold, for example, and national currencies were supposed to be interchangeable with gold. But any role gold had then has gone now. Except in extremis, such as in times of war, when gold finds function as a money of last resort, gold has not been used as currency, as a medium of exchange, for over a hundred years.

The remonetisation of gold, and the inevitable resulting official upwards revaluation, as governments tie their currencies to it once again to shore up their value, has been the dream of many a gold bug for many a year

In order to free themselves from the clutches of the US and its banking system, those countries that make up the Shanghai Cooperation Organisation (most of Asia) have long since wanted a settlement currency that is not the US dollar. The problem is what?

Which national currency can the likes of China, India, Russia, Iran and the various stans all agree on and trust in?

One possible solution is the internationally recognized money that is the shiny yellow stuff. Another is the rather less shiny, digital equivalent.

That gold has been used to settle a large debt between two SCO nations is, therefore, a very significant development. It may just be an “extremis” case, resulting from sanctions on Iran and Russia. It may also be a step in the direction of remonetisation.

Our misleading media

First, let me clear up the fake news.

I first spotted the story at Ross Norman’s site Metals Daily and, with Ross’s kind help,  have since done some digging.

“Moscow paid billions in gold bullions to Iran for Shahed drones, leaked documents reveal” says the headline at Indian news site, First Post. “Leak reveals minist