LAWRIE WILLIAMS: Russia adds a further 9.33 tonnes to its gold reserves

The Russian central bank has announced it added yet another tranche of 300,000 troy ounces (9.33 tonnes) to its gold reserves in November bringing its overall gold reserve level to a fraction short of 2,261 tonnes  This keeps it in fifth place among the world’s biggest holders of gold as reported to the IMF, although the Chinese figure is reckoned to be far higher than the level actually reported according to many observers and analysts.  This is probably a bit of an irrelevance to the Russians who continue to close in on the total gold holding levels reported by Italy and France - respectively 2.451.6 tonnes and 2,436 tonnes – and still well short of Germany’s 3,366.8 tonnes and the USA’s 8,133.5 tonnes.

Russia’ gold buying has totalled just over 148 tonnes so far this year, well down on the 274 tonnes it accumulated in 2018.  Indeed this year’s total looks like coming in at the lowest increase in Russian gold reserves since 2013.  Part of this decrease has been put down to the state encouraging Russian gold miners to sell more of their gold on international markets rather than rely on the state to take up most of the gold produced domestically.  This is presumably to help boost the inflow of export earnings, although Russia does manage to run a current account surplus unlike many other advanced nations.

Russia was the world’s second or third largest gold producer last year, depending on whose figures one takes.  This year it could become the world’s second largest gold producer for sure, putting it ahead of Australia if output growth matches some projections.  The Union of Russian Gold Producers has estimated 2019 output as reaching 350 tonnes, but this could even be an underestimate (See:  Is Russia already the world’s No. 2 gold producer and on way to No. 1?.  Russia, like China, is a strong believer in gold’s power to give international credibility to the nation’s currency, while it continues to cast doubt on the long term stability of the mighty U.S. dollar’s current dominance given the USA’s huge debt levels and seemingly ever growing current account deficits.  It is also looking to protect itself from financial warfare against the ruble being conducted, as it sees it, by the U.S.’s sanctions policies.  The latest moves by the U.S. to halt the Nordstream 2 under-Baltic oil pipeline would, in Russian eyes, seem to emphasise the U.S.’s weaponisation of the dollar.  It is also nervous about possible exclusion from the U.S.-dominated SWIFT international financial transactions system and has been making moves to set up an alternative, along with other countries which feel similarly threatened, or have already been frozen out of the system.

Table: World top 10 gold holders as reported to IMF adjusted for latest Russian figures

 

Tonnes

% of reserves**

United States

8,133.5

77.3%

Germany

3,366.8

72.9%

Italy

2,451.8

69.2%

France

2,436.1

62.1%

Russian Federation

2,259.7

21.0%

Mainland China

1,942.4

3.0%

Switzerland

1,040.0

6.1%

Japan

765.2

2.8%

India

618.2

7.0%

Netherlands

612.5

69.5%

Source: IMF, lawrieongold.com

As can be seen from the above table, apart from Russia – and China up until a few months ago – the world’s major gold holders have not been reporting any changes in their gold reserves for some time.  Whether this is an accurate representation of their true reserve holdings, or perhaps a function of central bank secrecy, is a moot point and open for discussion.

     

 

22 Dec 2019

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com