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LAWRIE WILLIAMS: Russia adds another 25 tonnes to its gold reserves

President Putin gets re-elected in a landslide and Russia continues to build its gold reserves adding another 800,000 ounces (24.88 tonnes) in February.  It’s ‘déjà vu all over again’ in the words of the late Yogi Berra.

Putin is seen to be a believer in gold both as a key asset in the global monetary system and as a foreign reserve diversifier away from the U.S. dollar.  The next step may well be to repatriate any Russian gold stored elsewhere in the world – we shall see. Russia no doubt feels that the U.S.-led West is ganging up on it following the latest allegations by the UK of Russian state involvement in what appears to have been an assassination attempt on a former double agent and his daughter using a Russian-developed nerve agent.  Strong circumstantial evidence points to Russia, but so far there has been no definitive proof of state involvement.

Currently, Russia appears to be one of the few countries expanding its new mined gold output as global production peaks and maybe is beginning to turn down.  According to the country’s Finance Ministry Russian gold production last year was 306.9 tonnes which would put it in second place among global gold mining nations.  See: Russia may now be World No. 2 Gold MinerOne suspects that the major independent gold analysts like Metals Focus and GFMS, when they produce their annual gold publications next month, may put the production level a little lower and it will be interesting to see if they assess Russia as the global No.2 or 3 producer.  It is vying with Australia for this position and the latter, which was No. 2 in 2016, is also seen to have been increasing its output last year but perhaps by not as much as Russia. (See:  Peak gold maybe but Australian and Russian output still rising)

In terms of reported gold reserves to the IMF, Russia is already the world’s fifth biggest national holder of gold, moving ahead of China in January – but we don’t really believe the Chinese figure given that it has reported a zero increase in its gold reserves for 15 straight months now.  We think it may be reverting to its old  pattern of gold reserve reporting where it only reports increases at multi-year intervals claiming that some of its gold was being held in non-reportable accounts – see: Chinese CB officially adds zero to gold reserves in February

The latest Russian figure now brings the country’s gold reserve to around 1,882 tonnes, as compared with the official Chinese holding of 1,842.6 tonnes, still well short of the U.S., German, Italian and French totals, but closing the gap as neither the USA, or big European gold holders have changed their reported holdings for a number of years now. Interestingly, in terms of officially reported reserves Russia and China combined hold around 3,725 tonnes of gold – well in excess of world no.2 individual holder, Germany’s, 3,373.6 tonnes  Gold truly is seen to be moving east!

But of course Russia is still adding to its gold reserves month in month out and China’s figure may well be significantly understated. It would not surprise us if that in reality China and Russia combined may even hold more gold than the reported U.S figure of 8,133.5 tonnes.  It looks like the two nations may well see a future role for gold in the ever-changing world financial order which is largely being ignored by the West.

21 Mar 2018

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

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