Russia Deploys the Gold Weapon

If you follow war news from Ukraine, no doubt you’ve seen gruesome images of wrecked tanks, burnt trucks, demolished personnel carriers and more.  

Whether it’s Russian or Ukrainian equipment, almost everything you see is based on old Soviet-era designs such as T-72/64 tanks, or boxy BMP armored vehicles, etc. And when a rocket or shell hits those things the internal fuel and ammunition cooks off, and the machines burn like a torch. Bad design, obviously. 

But there’s another Russian weapon that was also recently deployed, and it appears to be working very well. You won’t find this system on the battlefield, though. In fact, this Russian device is an economic weapon, and it may prove to be one of the most impactful implements of war in the modern age.  

That is, the government of Russia recently pegged that country’s currency – the ruble – to gold. And right now, Russia’s central bank will buy gold at 5,000 rubles per gram through June 28. (After that, we’ll see.) 

Here’s why this is important. Russia has just established a state-supported bid for gold. In essence, Russia has recreated a new global gold standard with a well-defined floor beneath the price. This is big. It moves the gold price, and I mean upwards. Why? 

On the day that Russia set the bid at 5,000 rubles, the dollar-ruble exchange rate translated to gold at about $1,550 per ounce, or well below the London daily quote. No big deal, right? Well, not just then, not at that time. 

But something else happened. Within days of the Russian announcement of rubles for gold, the Russian currency strengthened firmly against the dollar.  

Today, about two weeks after the initial announcement, those same 5,000 rubles per gram translate to a gold price of about $1,925. Which is about what the London quote is.  

In other words, Russia’s hard fix of rubles for gold has equilibrated with the dollar-ruble valuation. Meaning what? 

Well, look at it this way: Russia has just undermined the ability of “paper” gold traders to sell the metal down too far, lest the spread open and arbitrageurs swoop in. 

Got that? With a Russian price floor beneath gold, there’s high risk to downside trading.  

Very clever. Russia has not gone out and simply bought gold contracts with the intent to corner the market, eventually present them for delivery, demand physical gold and basically “break the bank” in a strict sense. Nope. No brute force, like rolling a tank into town. And more than likely, if Russia had done that then the gold exchanges would have found some way to dishonor the underlying contracts and blame it all on “sanctions” or such. “No gold for you, Ivan!” 

In this instance though, Russia has been quite subtle, offering to buy gold at prix fixe. And in this manner, Russia has created a new economic playing field across the world. It’s currently embryonic, but there’s no denying that it’s a parallel platform to the dollar-dominated regime that has lasted since World War II.  

We now have a new scenario, though; a gold-backed floor price in which even the world’s most aggressive gold traders and market makers cannot sell the metal down, lest they fall into their own trading trap.  

But at this point it’s fair to ask, what makes this Russian ploy work? How will it be effective? 

In the introductory phase, the success (or not) of Russia’s gold gambit hinges on the country’s exports of natural gas. That is, Russia has told all buyers that it will sell its gas to “unfriendly countries” only for rubles.  

In essence, this segregates buyers. Everything is based on their political stand regarding Russia’s Ukraine military operation. More practically for the nations of Europe, Russia will accept no dollars or euros for gas, just rubles (or gold of course). And suddenly, literally within a matter of days, many gas buying nations must come up with a whole lot of rubles. 

Looking ahead (and recall that June 28 date above), it’s more than likely that Russia will announce sale of oil in rubles, which matters when that news comes from one of the world’s top three oil producers. And then there are Russia’s exports of minerals, agricultural products and pretty much everything else.  

If you add up Russia’s exports of gas, oil, minerals, ag and other things – weapons come to mind – the overall value is in the range of half a trillion dollars per year. Now translate all that into rubles, and it’s a lot of currency exchange banking.  

Or translate that cumulative dollar-total of Russian exports into gold at 5,000 rubles per gram, it makes for a lot of gold.  

Right now, across the world people, companies and nations that hold dollar reserves are still mentally processing this new state of monetary affairs. And there’s much to process, considering the general lack of appreciation towards gold in modern Western monetary thinking. Plenty of disdain, actually.  

So, we’ll see. And recall that old saying, “Wisdom may come late, but it seldom never comes.” Meaning that sooner or later, people will figure out that if they want Russian gas, oil, minerals, food and much else, they will have to fork over the rubles. And many dollar-holders will then lighten up and sell bucks to buy rubles, as well as buy physical gold. 

One way or the other, we will witness the dollar weaken, perhaps a little bit and slowly, or maybe a lot and fast. While the ruble will likely strengthen, which means that the dollar-ruble exchange rate will tighten.  

At the end of the day, the dollar-price for gold will rise, and along with that the valuations of many gold mining companies will move upside. Heck, we may even see a meltup in the price of gold, and an investor panic into gold miners across the entire sector, from juniors to established biggies.  

Here’s the takeaway. Russia’s central bank will pay 5,000 rubles per gram of gold, and this sets a hard, new price floor. The dollar-ruble rate has tightened, and Russia has now created a new gold standard for the world, backed by its natural gas if not its oil, minerals, agriculture and other exports, all under cover and protection of Russia’s well-known nuclear weapons complex.  

It’s worth noting that Russia has been planning this move for many years (with China in concert, more than likely). All of this didn’t just sort of happen. But here we are, and it’s not the time or place to recriminate. 

Predictions: Gold-backed rubles will strengthen. While ongoing inflation trends in dollars will weaken the U.S. currency. All this while few people in the West truly understand the basic idea that “gold is money.” 

A new, worldwide economic education process is about to begin. Time to brush off those century-old books about the “gold standard.”  

And however crummy those Soviet tanks and armored vehicles might be in the midst of modern war, the price of gold and gold miners is on the way up.   

That’s all for now…  Thank you for reading. 

Best wishes…   

Byron W. King  

Azincourt Energy Is Drilling for Uranium in the right place, Canada’s Prolific Athabasca Basin

USA bans Russian oil, gas, coal, but not uranium. How will Russia respond?

As U.S President Biden gives the Executive Order today to ban Russian oil, liquefied natural gas and coal the White House Fact Sheet gives a clue as to where the energy market is heading.

“Today, President Biden will sign an Executive Order (E.O.) to ban the import of Russian oil, liquefied natural gas, and coal to the United States…….In the long run, the way to avoid high gas prices is to speed up – not slow down – our transition to a clean energy future……..this crisis reinforces our resolve to make America truly energy independent, which means reducing our dependence on fossil fuels.”

President Biden has made it very clear that his vision for a green energy future means wind, solar, and smart nuclear. So today’s ban of Russian oil, gas & coal is a big win for the clean energy sector. Consumers are already facing record prices at the gas pump, which will lead to a faster adoption of electric vehicles. These vehicles will need a stable baseload power source such as nuclear to support the intermittent renewable energies of solar and wind.

All of this is bullish for uranium and lithium. Today’s company is focused on just that.

Azincourt Energy Corp. (TSXV: AAZ | OTCQB: AZURF) (“Azincourt”) is a Canadian-based resource company specializing in the strategic acquisition, exploration, and development of alternative energy/fuel projects, including uranium, lithium, and other critical clean energy elements.

Azincourt’s 3 projects

  • East Preston Project (72% interest) – A uranium project in the Athabasca Basin, Saskatchewan, Canada.
  • Hatchet Lake Uranium Project (earning into a 75% interest) A uranium project in the WollastonMudjatik Transition Zone area of Saskatchewan, Canada. Some details here.
  • Escalera Group Project (100% owned) A uranium and lithium group of projects (Lituania, Condorlit, Escalera) in Puno, Peru.

The Athabasca basin is home to multiple large very high grade uranium mines and projects


East Preston Project progressing with road and camp built and drilling underway

Azincourt has had a very busy past 3 months at their East Preston Project. The 73 km winter road to access the property and campsite has been completed.

The 2022 drill program at the East Preston Project includes 6,000m of drilling over 30-35 drill holes, throughout the months of January and February and into March. The primary target area for the 2022 program is the conductive corridors from the A-Zone through to the G-Zone (A-G Trend) and the K-Zone through to the Q-Zone (K-Q Trend). Permits are in place to complete all the planned work through the winter of 2022. The program is funded and boosted by a recent C$390,250 non-brokered private placement.

Drilling zones shown at the East Preston Project


Regarding the drill results to date at the East Preston Project, Azincourt stated on March 1, 2022:

“We are very excited by the results coming in so far,” said VP, Exploration, Trevor Perkins. “Both the G- and K-Zones are responding incredibly well, and the team is very excited by what they are seeing in the core. The results show that there is still a good deal of work to be completed in these areas and I can’t wait to see what the follow-up drilling reveals,” continued Mr. Perkins.

“Finding this broad zone of strong alteration is a significant development,” said president and CEO, Alex Klenman. “Alteration features are a crucial guide to locating uranium mineralization. Given what we know about alteration zones and their relationship to some very well-known discoveries, finding this at East Preston is certainly an encouraging development. We will continue to focus on the K-Zone for the time being to get a better idea of the extent of the alteration and the type and level of mineralization present,” continued Mr. Klenman.”

The first shipment of core samples from the current drill program were scheduled for delivery last week to be delivered to the SRC Geoanalytical Lab in Saskatoon. Azincourt expects to receive full suite assay results in early April.

Closing remarks

As we move away from fossil fuels and electrify our transport systems the West will need a ‘secure’ supply of uranium. For now the U.S ban on Russian energy imports (oil, gas, coal) does not include uranium. However, the West relies heavily on Russian-Kazakhstan uranium, which the Russians could choose to cut supply at any time. Russia has recently threatened to ban gas exports to Europe, which would lead to shock waves in the colder areas relying on Russian gas.

The highest grade and best location to find a ‘secure’ supply of uranium is in the Athabasca Basin of Canada. Azincourt is currently drilling their flagship East Preston Project in the Athabasca Basin.

A highly successful drilling campaign can potentially be a game-changer for a small company such as Azincourt Energy Corp., which trades on a market cap of C$39 million. Investors eagerly await news of the drill results in the coming months. Stay tuned.