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LAWRIE WILLIAMS: Russian gold reserves on way to 2,000 tonnes

The Russian central bank has announced that it has added another 800,000 ounces (24.9 tonnes) to its gold reserves in July, confirming its official position with the IMF as the world’s fifth largest national holder of the precious metals in its reserves. With the latest addition, the Russian gold reserve is at around 1,969 tonnes so the continuation of gold reserves at the current rate will see it surpass the 2,000 tonne mark within a couple of months. Should it continue to add to its gold reserves at the present and recent rate it will move into third place in the table by the end of the current decade.

 World’s Top 10 National Holders of Gold (as reported to the IMF)

 Rank     Nation          Tonnes reported

1.           USA                  8,133.5

2.           Germany           3,369.9

3.           Italy                  2,451.8

4.           France               2,436.0

5.           Russia               1,968.9

6.           Mainland China  1,842.6*

7.           Switzerland       1,040.0

8.           Japan                  765.2

9.           Netherlands         612.5

10.         India                   561.9

Figures as at end June 2018 except Russia adjusted for latest addition

* China appears to be back to reporting additions to gold reserves at multi-year intervals, so true figure is almost certainly higher.

Source: IMF and Lawrieongold.com

 

So far this year, Russia has added a total of just under 131 tonnes of gold to its reserves, which could put it on target to add 225 tonnes over the full year extrapolating this data over the full 12 month period. This would be an increase over the around 200 tonnes a year it has been adding for the past three years. Russia sees gold as a safe haven monetary defence against what it sees as aggressive anti-Russian policies by the USA represented by sanctions being imposedon Russian goods, expertise and individuals. This will undoubtedly drive Russia closer to the third major global power, China.

China is currently the sixth largest gold holder as reported to the IMF, but as we have frequently stated beforehand we believe China is hiding the true level of its gold holdings in accounts which it does not report to the IMF. It has a track record of doing this in the past and only reporting its increases in gold holdings as, and when, it sees fit – the last time this happened was in 2015 when it announced a 600 tonne addition after reporting a static figure for six years. We suspect that the country’s likely gold holding is currently north of 2,000 tonnes – possibly a lot higher – and we see the ultimate aim of surpassing the U.S. official 8,133.5 tonne holding. As to how close it is to that aim is uncertain. As the world’s largest gold producer at an estimated 429 tonnes last year it certainly has the capability of building its reserves surreptitiously and if so this would help account for the continuing anomalous situation whereby the world’s major gold consultancies continually report Chinese annual demand at a level well below known import and gold production figures.

China and Russia both see gold as having a significant importance in future trade and geopolitical agendas as the U.S. dominance in these areas is potentially being eroded and with the U.S. seemingly taking increasingly hostile actions against the nations. The recent big increase in the U.S. defense budget has also been ringing alarm bells as the world becomes increasingly polarised with the U.S. under President Trump seeming to initiate hostile trade and political moves upsetting friend and foe alike.

21 Aug 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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