LAWRIE WILLIAMS: Russia continuing to increase gold reserves – adds 18.66 tonnes in April
Despite U.S. sanctions impacting on some elements of Russia’s foreign trade, the country’s central bank is continuing with its seemingly inexorable increase in its gold reserves. Indeed recent reports suggest that, in part because of the strong oil price the country is currently running a balance of payments surplus regardless which it may well turn into gold – particularly as the nation’s annual gold production level is seen as increasing as well – even if global gold output is flat or falling! There may also be a political element involved in turning to gold, and reducing reliance on U.S. dollars in its forex reserves.
In April, therefore, the country’s central bank reports adding the rounded figure of 600,000 ounces (or 18.66 tonnes) to its gold reserve total bringing the overall figure as will be reported to the IMF (Russia is one of the few countries reporting its gold reserve changes on a month by month basis) to around 1,909.5 tonnes – the world’s fifth largest reported natioinal holding and now some 67 tonnes higher than China’s reported holding. However we remain extremely sceptical about the Chinese figure as stated given that the Asian dragon has reported zero increases in its reserves for fully 18 successive months (See: China’s official gold reserves unchanged – again). We think the Chinese position, as reported, extremely unlikely – indeed the country has a strong past track record of only reporting its reserve increases at multi-year intervals.
We would assert that both Russia and China both see gold as having an important role to play in any future global financial realignment and certainly will be targeting the big European gold reserve totals held by Germany, France and Italy, if not the currently dominant U.S. reported gold holding which has been static for some years now at 8,133.5 tonnes. Indeed some believe that China, in particular, has its sights set on exceeding this U.S. total to further increase its global trade bargaining position as its GDP continues to rise.
There is also some dissension with regard to Russia’s annual gold ouput. Consultancies Metals Focus and GFMS both see its output rising but still have it in third place among the world’s major gold producers – behind China and Australia . But figures released by Russia’s own finance ministry back in February (See: Russia may now be World No. 2 Gold Miner) reported the country’s national gold output total last year at 306.9 tonnes, which would put it well ahead of the Australian total of around 290 tonnes as assessed by Metals Focus. (However it should be noted that Australian precious metals consultancy Surbiton Associates put the country’s figure at 301 tonnes last year). Both Russia and Australia, though, still remain well behind China’s apparently falling gold output level of ca 430 tonnes whoever’s figures one takes!
19 May 2018