LAWRIE WILLIAMS: Russia adds another 15.6 tonnes of gold to reserves in April
The Russian central bank is continuing to buy gold at a faster rate than China with a purchase of 500,000 ounces (15.6 tonnes) of gold in April according to figures put out on Friday. The amount is interesting as it the same sized addition as in the previous month and while the February increase was smaller at 9.3 tonnes, January was larger at 21.8 tonnes so the increase for January and February combined was thus at the equivalent of 15.6 tonnes a month. Does this now mean that the Russian central bank has set itself a gold reserve increase target of 500,000 ounces (15.6 tonnes) a month. If this rate of buying persists through the year then it could be that it is aiming to build its reserves by 187 tonnes in 2016.
Russia has thus been buying significantly more gold than the No. 2 buyer China so far this year with purchases totalling 62 tonnes so far against the 46 tonnes so far reported by The Peoples Bank of China. If both continue purchases at the current rate that would suggest an increase of central bank gold holdings from these two countries alone of over 320 tonnes.
The only other central bank which appears to be buying gold on a regular basis is that of Kazakhstan which has been adding to its gold reserves at about 2.7 tonnes a month. We will have to wait until the IMF publishes its next report on global gold reserves to see if there are any other significant purchasers or sellers. We should probably discount Turkey from the figures for sales or purchases though as it includes its commercial bank holdings as a part of its reserves and these are far more prone to fluctuations up and down. (Note: We have been speculating that China may also consider its state-owned commercial bank gold holdings, which are perhaps close to 3,000 tonnes, as a part of its own reserves, although unlike Turkey is not presenting them as such – See: China's Govt controlled gold reserves already 4,500 tonnes plus.
China is the world’s No. 1 gold producer at about 460 tonnes annually and Russia No. 3 with 268 tonnes and Kazakhstan No. 13 at 64 tonnes (See: World’s Top 20 gold mining nations 2015, so all three countries’ central banks are perhaps buying up a proportion of their own new mined gold output. However gold demand in China for consumption and by the commercial banks is such that it is also a very substantial gold importer – probably around 1,400 tonnes we know about last year from other countries’ (and Hong Kong) export statistics plus other data, whereas Russia and Kazakhstan are mostly exporters.
Russia anticipates expanding its own gold output over the years – a figure of annual production of 400 tonnes a year by 2030 has been reported, although this is sufficiently far off for it to be a very vague target given most of Russia’s production is by non-state-owned entities and thus not really subject to this kind of advance planning.