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LAWRIE WILLIAMS: Russian gold reserves – now 1,800 tonnes and rising

The Russian central bank added another 700,000 ounces of gold (21.8 tonnes) to its gold reserves in October, which now puts it within a whisker of China’s 1,842.6 tonnes with a total holding of 57.9 million ounces – or just over 1,800 tonnes.  Given that China is currently reporting zero month by month increases in its reserves (which we believe is not its true gold accumulation position), it looks as though Russia, which has been expanding its gold reserves by around 200 tonnes a year (around 185 tonnes so far this year – with 2 months to go), remains on target to overtake China’s ‘official’ reserve figure by the end of the current year, or early next.

As we have noted here before, we consider the Chinese reports of zero additions to its officially reported gold reserve figure, which has remained static for 12 months, as dubious at the very least.  While we don’t think Russia’s gold reserves increases are designed to leapfrog China as the world’s No. 5 national official holder of gold, they will do this if the country continues to add to reserves at the current rate and China continues to report zero increases.

Rather, the Russian gold reserve building programme is in place in part to reduce the nation’s reserve dependence on the U.S. dollar.  This is in recognition that the increasingly hostile rhetoric that is arising from the neocon element in the U.S. hierarchy could lead to Russia being cut off from the U.S. financial system as the possibility of economic sanctions being increased, as suggested by U.S. Treasury Secretary Steve Mnuchin,  is seen as real.  While President Trump may well be disinclined to raise the ante in any U.S. – Russian stand-off, his lack of success in ‘draining the Washington DC swamp’, which still seems to call the tune on U.S. foreign relations policy, suggests Russia’s current policy vis-à-vis gold may be a sensible one.

21 Nov 2017

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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