Russia’s Central Bank Purchased A Record 8.8 Million Ounces of Gold in 2018
The comments below are an edited and abridged synopsis of an article Ben Aris
The Central Bank of Russia (CBR) purchased a record 8.8 million ounces of gold (+/-274 tonnes) in 2018, up from the 7.2 million ounces (+/-224 tonnes) it bought in 2017, an increase of 22.2% year-over-year.
The CBR has been buying gold since 2007, but the purchases have accelerated recently as Russia tries to protect itself from possible sanctions by the US this year.
Russia’s gold reserves now account for 18.6% of the CBR’s total gross international reserves.
In 2018 the CBR is said to have dumped 84% of its US Treasuries holdings, bringing them down to $14.9 billion, and steps to lower Russia’s dependence on the US dollar were taken.
The CBR has increased its Chinese yuan holdings; they were up to 15% as of year-end 2018 from 5% at the end of the first quarter 2018. That is far beyond China’s share of Russia’s trade, which topped $100 billion in 2018, but only 14% of these deals are settled in yuan, and 7-8% are settled in rubles.
The yuan is the 4th-largest component of Russia’s international reserves after the euro (32%), the US dollar (22%) and gold (17%).
Stockpiling gold has been a good bet. The world’s geopolitical brouhaha drove up the value of gold by 13.4% in 2018, so the CBR’s reserves are now valued at $86.9 billion from total reserves of $468.5 billion as of December 2018.
Russia is now the 5th-largest holder of gold among the world’s central banks. The first four places are held by the US, Germany, France and Italy.
The CBR buys gold from Russian commercial banks, but the size of its future purchases is a state secret. It remains unclear if the CBR will continue to buy gold in 2019. Recently, it has been adding some 14% annually.
Russia’s hunger for gold may be behind the decision to award the rights to exploit the Sukhoil Log gold deposit, the largest proven gold deposit in the world, to Polyus Gold last year, after a quarter century of wrangling.