Sakha Republic to start trading gold for Russian Ruble

The Russian republic of Sakha will start accepting gold as payment for taxes and other mandatory payments, following a recent regional law.

The law approves an experiment to allow the use of small-scale mined gold as a way of payment during a three-year period. The move to accept the yellow metal as a means of payment is intended to support both small miners and the regional economics under Western sanctions.

The gold will be used to pay taxes, fees and other mandatory payments to the regional budget. However, it will not be accepted for use in commercial transactions between individuals or companies.

The gold must be in the form of bars or nuggets and must have a purity of at least 99.95%. It will be valued at the official price set by the Central Bank of Russia.

The experiment will be closely monitored by the regional government, following the global interest for the use of gold as a safe haven asset since the beginning of the conflict between Russia and Ukraine.

According to the Russian news agency Tass, a pilot project using gold as a legal tender was previously launched in the Irkutsk region. The region's authorities stated that the local jewelleries and banks welcomed the project. But they also noted that the project resulted in a limited number of transactions using gold.

Many regions in Russia are rich in natural resources, including gold. The Sakha Republic is the largest diamond producing region in Russia and has significant gold reserves.

The move to accept gold as a payment is expected to boost the region's economy and help to attract investment. It could also help to promote the use of gold as a currency.

Gold has been used as a currency for centuries, and it is still considered a valuable asset by many investors.

The price of gold has been rising in recent years, as investors seek safe haven assets amid the global economic uncertainty.

The use of gold as a currency could help to reduce the reliance on fiat currencies, which are issued by central banks and are subject to inflation.

However, there are also some risks associated with using gold as a currency. One risk is that the price of gold can fluctuate significantly, which could make it difficult to use as a stable store of value.

Another risk is that gold is a physical asset, which can be difficult to store and transport.

Overall, the use of gold as a currency is a complex issue with both benefits and risks. The Sakha Republic's experiment will provide valuable insights into the potential benefits and challenges of using gold as a currency.