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LAWRIE WILLIAMS: Russia continues to add to its gold reserves

In June Russia added a further 500,000 ounces (15.6 tonnes) of gold into its forex reserves bringing them to a total of 62.5 million ounces (1,944 tonnes) so heading for a year-end total of over 2,000 tonnes. 

This will keep it comfortably in fifth place – after the USA, Germany, Italy and France in the global table of national gold holdings as reported to the IMF.  China, which remains in sixth place, though has reported zero gold reserve increases for 20 successive months though and we believe that in reality its true level of gold holdings is considerably higher with a large proportion being held in accounts it feels no need to report to the IMF. (See: China’s gold reserves – fact or fiction?)

So far this year Russia has added a total of 106 tonnes of gold to its reserves, while at the same time running down its holdings of U.S. Treasuries to near zero from $100 billion at the beginning of the year.  This year to date build-up in reserves is similar to the kinds of figures added for the previous three years – the country has been maintaining a 200 tonne plus annual increase over this period – and is seen as a defensive position against any financial action that might be taken against the state by the West – and by the USA in particular.

President Trump’s meeting with Russia's President Putin in Helsinki has gone down far from well amongst both the U.S. Democrat opposition and even some of his own supporters.  Anti-Russian feeling runs deep in the USA!  Perestroika from the Reagan/Gorbachev era , which led to the break-up of the Soviet Union as was, seems long forgotten.  But from a neutral observer’s point of view dialogue between the two superpowers has to be a positive move be they competitors, as President Trump appears to call them, or deadly adversaries as seems to be the position taken by many in the USA.  One would expect the Democrats to try and blacken Trump’s name – they are still sore from the loss of the Presidency, and Congress control, to the hated Republicans – while the U.S. right wing, as represented by the various elements in the Republican party is probably at heart anti-Russian – but then President Trump is probably not a true Republican in political terms and ploughs his own furrow.  Some of his statements and policies seem crass and reprehensible but to brand him a traitor for sitting down with Putin and seemingly siding with him on some of the anti-Russian views being expressed by hostile elements in the U.S. state seems enormously over the top.  Trump does not fit the bill of a traitor at all, quite the opposite – at least in this writer’s opinion.   But then I don’t live in the USA and am not exposed day-in-day-out to the opinions of the U.S. media and intelligentsia which from here seems to be largely anti-Trump – as is our own media in the U.K.

Russia though obviously still feels the need to protect itself from U.S. financial actions as much of global trade relies on the U.S. dollar to smooth its path.  Sanctions have been imposed, primarily over the annexation of Crimea and the ongoing military action in east Ukraine - and one suspects Russian support for Syria’s President Assad will not have helped here nor its potential support for what the USA has branded rogue states like Iran and North Korea. 

Trade sanctions against Russia are having only a limited effect though – the Russian economy after a minor negative period, appears to be growing again with China replacing the West in many trade areas so sanctions are being survived.  In some cases the sanctions will be more damaging to some of those countries being forced to impose them – particularly if the U.S. takes retaliatory action against those accused of sanctions breaking.

21 Jul 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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