A reminder this week that Russia acts as a protection racket for African warlords to help pay for its war effort.
Eleven people in the Central African Republic were shot to death at a gold mineoperated by Russia’s Wagner Group. The victims lived nearby and were searching for gold residue and gravel when they were summarily killed. Wagner is often accused of rights abuses and extrajudicial killings with little or no accountability in Central African Republic, where the mercenaries served as personal bodyguards for President Faustin Archange Touadera. Wagner helped Touadera win a 2023 constitutional referendum that could extend his power indefinitely.
So it works like this:
- Russia/Wagner keeps a government in power.
- In exchange, Russia/Wagner gets a gold mine or some other natural resource of value
- The gold is moved to the United Arab Emirates, where it sits in a trusted third-party vault.
- The UAE acts as a way station for countries evading US/EU sanctions. The gold probably never leaves the vault, but ownership is transferred in exchange for drones, conventional weapons, parts, North Korean soldiers … whatever Russia needs. It also receives gold for oil and other commodities it exports.
- Bitcoin also gets moved into the UAE and converted into fiat-denominated assets including gold.
An entire barter ecosystem is lubricated by gold and exists outside SWIFT, outside sanctions and outside the purview of the man in the White House who thinks the solution to every problem is a tariff. The BRICS currency already exists, and it’s gold. It’s why Russia is seizing gold mines from its oligarchs – Rubles don’t travel like they used to.
The guy at Goldman who coined the term BRIC for a research paper has got to be surprised it’s still a thing. None of the members of this loose alliance of convenience like or trust each other. Because of that there’s no hypothetical common currency that would ever work. Heck, Russia is at war. Do you really think it wants large reserves of Indian Rupees in exchange for oil shipments? Or that India would ever accept payment from Russia in Yuan because that’s what Russia received from China?
So my investment case for gold is a long-term supply/demand imbalance. A supply/demand imbalance that already exists and will be made worse by US fiscal policy and western retail buying.
This is already too long, but I’ll explain my thoughts on stablecoins in this context at a later date and why I own Ethereum and Solana as stablecoin proxies. Ethereum is 22% below its all-time highs and I expect it to blow past that level in this crypto cycle.
