Is There a Pattern to Russia’s Central Bank Gold Purchases?
The comments above & below is an edited and abridged synopsis of an article by Lawrie Williams
Russia’s central bank is looking to build its gold reserve base by around 200 tonnes a year. There was a zero increase in gold holdings in December 2016 that could be a confirmation of this target figure, as the 200-tonne total had already been achieved in November.
Russia is the world’s 3rd-largest gold producer, after China and Australia, and its annual output has been on the rise, while many other nations have seen decreases. One estimate suggests Russian gold output could increase to 400 tonnes by 2030. If Russia can achieve that, it would be on par with China, where gold output, currently around 460 tonnes a year, is falling.
It is significant that both the Russian and Chinese governments appear to believe that the size of their gold holdings will be of great importance to their global financial status in the years ahead.
Figures from Russia show that they want to add around 200 tonnes annually to gold reserves despite problems within the domestic economy (US and EU economic sanctions, low oil and natural gas prices). This figure is 60 to 70 tonnes below Russia’s own gold output, and levels may rise if the country’s miners increase gold output further. Russia is coping well with the economic sanctions, and probably strengthening ties with China.
At a gold reserve increase of 200 tonnes a year, Russia will overtake China as the 5th-largest national holder of gold early next year. China has been reporting zero monthly increases since the yuan became part of the IMF’s Special Drawing Rights (SDR) currency basket in October 2016. It may be building reserves without reporting the increases, however, and its gold holdings could be significantly higher than the 1,842.6 tonnes it admits to. China may well have two or three times the amount actually declared, with the ultimate aim of exceeding the 8,133.5 tonnes claimed by the US.