Last night russia decided to invade ukraine obviously this is a very serious situation i think it's important to understand the economics behind these types of decisions the people in ukraine many of them may lose their lives and obviously most of them have no appetite for violent conflict i hope all of them are safe also on the russian citizen.
Side many of those citizens also have no appetite for violent conflict as well simply what we have are governments engaging in war in invasions if we begin to understand what some of the economics behind this invasion end up being what we first have to understand is that russia has over 600 billion dollars in their central bank reserves of foreign.
Currencies in gold so not u.s dollars or not other types of assets 600 plus billion dollars of foreign currencies and gold on top of that russia is one of the largest producers of oil and natural gas in the world russia is responsible for about 17 of all natural gas produced in the world.
And about 12 percent of all oil as you can see here russia has a ton of natural gas lines that also run through ukraine as well there's a lot of geopolitical complexity that goes on in these situations but ultimately what we have seen over the last two years is that the price of oil has continued to rise over time.
In the united states and abroad everyday citizens are paying more for gasoline at the pump and for various other uses of that energy production but now all of a sudden russia who's the third largest oil producer in the world as the price of oil rises which is now trading at over a hundred dollars per barrel the international community has to keep.
Buying oil from russia that means that at the same moment that they're invading ukraine we're also having the international community united states and their allies continuing to purchase higher priced oil which is putting more money into the coffers of russia if we go ahead and we look at the oil itself what you can see here is the united.
States is the number one oil producer in the world russia being number three but the reason why this is important is because even though the united states is the largest producer they also happen to be the largest consumer as well the united states is actually a net importer meaning that we need and are reliant on other countries producing oil in order.
For us to have enough to satisfy our consumption russia on the other hand is a net exporter of that oil and so they're benefiting drastically from the rise in oil prices if we continue to look here you can see that russia's crude oil ends up going to europe and asia two places that are close geographically to their jurisdiction if.
We then go ahead and look at the russian trade surplus what we can see is that they continue to surge even though there are rising tensions and now an actual invasion on top of oil production and the money that's being made with higher oil prices russia also has that 600 plus billion dollars of foreign currencies in gold.
Gold is up about 5 over the last 30 days or so and so ultimately not only is russia making more revenue from the higher price of oil but they also are watching their balance sheet grow in value as well because that gold is going up in price war is a really really ugly thing people die people are displaced and ultimately.
It ends up moving us further and further away from a place of harmony globally but what is important to understand is that there is 3d chess going on here in some way russia has figured out that they can apply pressure that they can call the bluff of the united states and nato and they can make money while they do it.
This obviously didn't happen overnight and so what we've seen over the last few years is that russia their central bank and their government they're playing a long game and ultimately now the question is going to be how will the united states and nato respond how severe will the economic sanctions be what is the appetite for violent war in.
Response i don't have those answers i'm not an expert on geopolitics but when you follow the money it's absolutely surreal to watch what's playing out here