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LAWRIE WILLIAMS: Gold: Russia adds another million

The Russian central bank has just released the latest figures for its August foreign exchange reserves and reveals it has added a further 1 million ounces of gold (31.1 tonnes) to its reserves that month. This brings its grand total to just over 2,000 tonnes as we suggested a month ago. It now has the holdings of Italy (2,451.8 tonnes) and France (2,436.0 tonnes in its sights to become the third largest national gold holder after the USA (8,133.5 tonnes) and Germany (3,369.9 tonnes) – all figures as reported to the IMF.

This moves Russia even further ahead of China in terms of reported reserves, but as we have pointed out numerously beforehand we do not believe the reported China figure as it has a long track record of holding some of its gold in non-reported accounts and only upping its reserve figure when it feels it is opportune to do so. And even then we doubt it is reporting its true gold reserve levels which could even be a multiple of times higher than the 1,842.6 tonnes it has been reporting to the IMF for the past 22 months (See: - China Gold Reserves - Another Month, Another Zero).

Russia and China are both believed to by buying gold as they feel the yellow metal will have an important role to play in the ongoing development of the global financial system. Russia, and perhaps China too, are also believed to be buying gold, amongst other moves, to reduce their dollar-related forex holdings.

The IMF’s latest figures for the world’s top 10 national holders of gold as reported at the beginning of the current month – but updated for the latest Russian figure – are set out below:

 World’s Top 10 National Holders of Gold (as reported to the IMF)

 Rank     Nation          Tonnes reported

1.           USA                  8,133.5

2.           Germany            3,369.9

3.           Italy                  2,451.8

4.           France              2,436.0

5.           Russia              2,001.1

6.           Mainland China  1,842.6*

7.           Switzerland        1,040.0

8.           Japan                  765.2

9.           Netherlands          612.5

10.         India                    573.1

Meanwhile the World Gold Council’s statistical department has reported that central bank gold purchases in H1 2018 have been at the highest level since 2015. In its introductory summary the WGC notes: “Gold is an important part of central banks’ foreign exchange (FX) reserves. According to the International Monetary Fund (IMF), at the end of H1 2018 central banks collectively owned US$1.36tn of gold, around 10% of global FX reserves. And central banks are an important part of the gold market: in H1 2018 they accounted for 10% of demand. Looking ahead, we expect central bank demand to remain buoyant.”

The latest figures from Russia certainly support the last premise. Russia has been the biggest purchaser of gold for its reserves of all, followed by Turkey and Kazakhstan so far this year – these nations accounted for 86% of central bank gold purchases in H1 2018. The WGC notes also that several other central banks have also reported buying some gold this year with Egypt having purchased some gold for the first time since 1978 and that India, Indonesia, the Philippines and Thailand have all purchased relatively small amounts of gold after multi-year absences from the market.

All in all, the WGC reports H1 central bank gold buying as totalling 193.3 tonnes, up 8% on 2017’s 178.6 tonnes over the same period, being the highest H1 purchasing level for three years although still below central bank H1 purchases from 2011 to 2015.

21 Sep 2018 | Categories: Gold, China, Russia

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