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LAWRIE WILLIAMS: Sharp drop in Russia’s gold reserve increase in April

The Russian central bank has announced another increase in its gold reserves during April, but this time only of 200,000 ounces (6.2 tonnes) compared with 800,000 ounces (24.9 tonnes) in March.  However perhaps not too much should be read into this monthly fall as being indicative of a slowing down of gold purchases yet, as monthly reported increases do fluctuate substantially.  For example Russia added zero ounces to its gold reserves in December last year, and a very small 100,000 ounces (3.1 tonnes) in May 2016, although in total added just under200 tonnes for the full year.  There have been other months in the past few years when the Russian central bank has reported zero, or very low, increases, but overall gold reserves have been added to at a high annual rate and the country currently remains the largest national gold purchaser.

Russia, according to the latest statistics from GFMS, is also the world’s third largest gold producer – after China and Australia – see tabulation of the world’s top 20 gold producing nations (click on  Top 20 Gold Producing Nations See Small Gain in Output in 2016 to view) and is thus apparently taking most of its newly-mined gold into its reserves.  With the April addition Russia’s central bank now holds around 1,686 tonnes – some 157 tonnes less than China in 5th place among national central bank gold holders reported to the IMF.  China has not reported any increase in its gold reserves since October last year when the Yuan was accepted into the IMF’s Special Drawing Rights (SDR) which de facto makes it acceptable as a global reserve currency.  This lack of reporting of increases, since the country achieved this aim, may not be coincidence as China has had a long track record of only announcing reserve increases at five or six year intervals, apart from during the 16 months preceding the IMF official acceptance of the Yuan as an integral part of the SDR when monthly increases were announced (supposedly in the interests of transparency).

If the Russian central bank reverts to gold purchases at the kinds of levels seen earlier this year, and assuming China continues to officially announce zero increases, Russia could surpass China in terms of officially reported gold reserves by the end of this year, or early next.  But given China’s prior track record of non-reporting of its seemingly ever-increasing gold reserves this might be a very misleading assessment.  Many believe China’s gold reserves may, in reality, be upwards of 5,000 tonnes with the ultimate aim of matching, or exceeding, the USA’s world leading figure of 8,133.5 tonnes.  Perhaps time will tell!

20 May 2017 | Categories: Gold, China, Russia

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