The Gold Report

"Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would favor the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund. Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the U.S. dollar, although the world may not yet be ready for such a radical proposal.

The gold standard was the anchor of world finance in the 19th century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the U.S., and France all abandoned their parities. It was revived as part of fixed dollar system until U.S. inflation caused by the Vietnam War and 'Great Society' social spending forced President Richard Nixon to close the gold window in 1971.

The world's fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible—or less likely—under the discipline of gold. Russia is a major gold producer with large untapped reserves of ore so it has a clear interest in promoting the idea. The Kremlin has already instructed the central bank of gradually raise the gold share of foreign reserves to 10pc. China's government has floated a variant of this idea, suggesting a currency based on 30 commodities along the lines of the 'Bancor' proposed by John Maynard Keynes in 1944."