LAWRIE WILLIAMS: Russia adds just short of 160 tonnes to gold reserves in 2019

The country that may yet turn out to be the world’s second largest gold producer in 2019 when all the figures are analysed (Australia holds that position at the moment but Russia is closing the gap) continues to add to its gold reserves, but at a lower rate than over the past few years.  So saying the Russian central bank says it added a further 300,000 troy ounces of gold (9.33 tonnes) to its gold reserves in December bringing the year’s total gold reserve addition to 158.8 tonnes, compared with 200 tonnes or more for the previous three years.  Whether the apparent slowdown in gold purchases is a sign of reduced interest in gold now that it has virtually eliminated U.S. dollar based securities from its forex holdings , or an adjustment relating to a higher than usual purchase total in 2018 (around 275 tonnes) compared with around 200 tonnes in each of 2016 and 2017.  It should also be noted that this is now the third December in a row where the Russian Central Bank has announced a 9.33 tonne addition to its gold reserves.

Russia is indeed now adding to its gold reserves at a lower rate than in the past when its gold reserve accumulation was relatively close to its new mined production.  Now that the level of domestic Central Bank purchases is substantially lower than domestic production there has been the suggestion that the reduced CB purchases will serve to stimulate international gold sales and exports from Russia’s domestic gold miners.  This would obviously help keep the nation’s balance of payments current account even healthier than it already is, given further possible U.S. instigated economic sanctions or an economic blockade.  U.S. President Trump seems increasingly disposed towards weaponising the global economic system as an instrument of policy, and with most economic systems under effective U.S. control, and the adversarial political positions which are increasingly being taken by the U.S. and Russia, this could probably be seen as a wise move by the Russians.

We have continually expressed doubt on the reported level of China’s gold reserves which we assume to be far higher than reported to the IMF.  There has to be a degree of scepticism also in Russia’s month by month gold reserve increases given the rounded nature of these reported by the central bank – usually to the nearest 100,000 troy ounces.  It is apparent that both China and Russia, as do the central banks of many other countries, see a significant role for gold in any global financial reset which may lie ahead – a reset which seems to be becoming increasingly likely given the enormous debt levels of many of the world’s leading economies.

21 Jan 2020

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