LAWRIE WILLIAMS: Russian gold purchases slowing? - 6.22 tonnes in May

The levels of Russian central bank gold purchases seem to be slowing this year.  Whether this is a temporary issue or if it signifies an overall trend remains to be seen.

So far this year Russia added 6.2 tonnes in January, 31.1 tonnes in February, 18.7 tonnes in March. 15.6 tonnes in April and now only another 6.2 tonnes in May, making a total increase of 77.8 tonnes this year to date.  Extrapolating this total over the full year would mean the nation only adding around 187 tonnes in 2019.  This would be the lowest annual total for several years.  Last year, for example, Russia added around 275 tonnes of gold to its forex reserves.  Total Russian gold reserves are now reported at 2,190 tonnes which keeps it in fifth place among national holders of gold as reported to the IMF – and less than 250 tonnes behind France, currently the fourth largest national holder of gold.

It is too early to tell if this latest increase is indicative of a declining trend or not.  There have been occasional months in the preceding three or four years where Russia has added smaller amounts, and in December 2016 and January and February 2015 it added no gold at all.  Recently it has also been liquidating U.S. dollar related assets and may well have been purchasing gold in part to replace these (perhaps a smart move given the recent gold price rise).  It has reportedly now cut its dollar-related assets very substantially to their lowest level since 2007 with holdings in U.S. Treasuries having reported to have been reduced by $150 billion over the past decade. Russia is but one of several important nations which have been reducing dollar-related holdings – perhaps in response to President Trump’s aggressive approach to diplomacy and attempts to talk down the dollar’s relative strength against other key currencies.

 

21 Jun 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