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LAWRIE WILLIAMS: Russia adds another 21.8 tonnes to gold reserves in May

When we reported on last month’s comparatively small increase in Russia’s gold reserve in April of only 6.2 tonnes (See: Sharp drop in Russia’s gold reserve increase in April) we commented at the time that perhaps not too much should be read into this monthly fall in volume of reserve increases  as being indicative of a slowing down of gold purchases yet, as the nation's monthly reported increases can fluctuate substantially. Now the May figures are in we can see that we were correct as Russian gold reserves increased that month by some 700,000 ounces (21.8 tonnes) bringing the grand total of its reported gold reserves to around 1,708 tonnes.  This keeps Russia in sixth place among global national holders of gold after China in fifth, but closing the gap given China seems to have ceased to report monthly gold reserve increases since last October.  If this non-reporting by China continues and Russia continues to add to its reserves at the current rate then by the year end the gap between the two nations’ reported reserves to the IMF could be as little as 10 tonnes, or perhaps even less.

Of course, as we have noted before, China has a track record of non-reporting of its reserve increases.  Thus we don’t believe the Asian giant has ceased adding to its gold reserves at all and is holding these additions in accounts which it is not reporting until such a time it may feel politically, or financially, advantageous to do so.  It has done this in the past only reporting big increases in its reported reserves at five or six year intervals.  We suspect it has not yet reached its ultimate gold reserve target and considers it advantageous to continue the pretence that it has ceased buying gold as a device to keep the gold price suppressed in order to continue to adding to reserves at lower prices.  We see as significant the fact that it only reported monthly additions to reserves in the runup period to the yuan (renminbi) being accepted as an integral part of the IMF’s Special Drawing Right (SDR) basket of key currencies (which also includes the US dollar, the Euro, the Japanese yen and the British pound sterling).  Ever since the yuan’s inclusion in the SDR last October, China has been reporting zero increases in its reserves on a monthly basis.  We don’t think this is coincidental.

Given the air of secrecy which surrounds Chinese direct gold imports, coupled with the fact that it is the world’s largest new gold producer at around 450 tonnes annually, it would be fairly easy to assimilate additional tonnages into government controlled vaults surreptitiously.  Again as we have noted before this could, in part at least, account for the fact that known gold exports to China, from countries which publish these statistics, plus domestic gold production, come out hugely higher than the major precious metals consultancies (Metals Focus, GFMS and CPM Group) all calculate as Chinese gold consumption.

20 Jun 2017 | Categories: Gold, China, Russia

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