LAWRIE WILLIAMS: Russian central bank now holds over 2.250 tonnes of gold

The Russian central bank is continuing its gold buying programme, but is increasing its reserves this year at a noticeably slower rate than it has in the previous three.  Its latest reported increase (for October) is of 300,000 troy ounces (9.33 tonnes), a similar level to its July accumulation, but below that for August and September.  It now has some 2,251 tonnes of gold within its forex holdings – still a little behind Italy and France, but closing the gap.  We had speculated that Russia’s holding could exceed those of Italy and France within 2 years, making it the world’s No. 3 national holder of gold as reported to the IMF within the next couple of years, but with the recent slowdown in purchases this may now take a little longer.

Table 1: Top 10 National gold holders – updated for latest Russian figures

Country

Tonnes

% of reserves**

United States

8,133.5

76.9%

Germany

3,366.8

73.0%

Italy

2,451.8

68.4%

France

2,436.0

62.9%

Russian Federation

2,251.3

20.2%

China, P.R.: Mainland

1,948.3

2.9%

Switzerland

1,040.0

6.0%

Japan

765.2

2.8%

India

618.2

6.9%

Netherlands

612.5

69.7%

Source – www.gold.org

Russia is the world’s third largest producer of gold and has its eyes on the No. 2 spot, overtaking Australia, which it could also do in the next few years.  Looking further ahead, if it continues to grow production at the current rate it could even have the goal of overtaking China, the current world No. 1, within a few years given that Chinese gold output appears to be falling. 

The world’s top 10 gold producers based on 2018 production figures as assessed by Metals Focus, are shown in the table below extracted from www.lawrieongold.com :

Table 2: Top 10 Gold Producing Nations 2018 (Tonnes)

Country

20 18 Output

China

404

Australia

315

Russia

297

USA

222

Canada

189

Peru

158

Indonesia

137

Ghana

131

South Africa

130

Mexico

115

Source: www.lawrieongold.com, Metals Focus

Russia has been virtually eliminating U.S. dollars and other dollar-related holdings from its reserves for fear of financial sanctions, and its increase in its gold holdings has been a significant part  of this process.  The Russians, along with the Chinese, feel that gold will have a significant role to play in any global currency reset when the current system likely collapses under the pressure of effectively unlimited debt run up by key economies – notably in the U.S. and in some key European and Asian countries.  Russia has been building its gold reserves openly, while many believe the Chinese have been doing so surreptitiously with its true gold reserve position hugely higher than the figures it reports to the IMF.  With both nations being significant gold producers in their own right, their gold reserve building capability is without question.

21 Nov 2019

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