Russia on a Gold Buying Spree
The Russians have launched into a gold buying spree.
Based on recently released International Monetary Fund numbers reported at Mining.com., the Russian central bank ranked as the world’s leading gold buyer in February, adding 356,000 ounces to its reserves:
Last December, Russia announced plans to increase its gold reserves to $500 billion within the next five years. As a Russian publication put it, “Gold is considered to be a buffer against external economic risks and is currently in favor in Russia.”
China continued to add to its gold hoard as well. The IMF has not included China to its statistics to date, but the People’s Bank of China reportedly bought around 320,000 ounces in February. The Chinese central bank reported its total gold reserves at 57.5 million ounces. It has added about 130 tons of the yellow metal to its stash since it resumed regular reporting back in July.
Senior economic adviser to Rosland Capital LLC Jeffrey Nichols told Bloomberg that China and Russia are accumulating gold for similar reasons:
The Russian central bank is similar in some sense to the Chinese central bank. They’re acquiring gold for strategic and political gain, with the hopes that their currencies will look more attractive if they have larger gold reserves.”
Many analysts believe these countries are increasing their gold holdings to minimize exposure to the US dollar. Victor Thianpiriya of Australia & New Zealand Banking Group Ltd. told Bloomberg last December that many countries have been diversifying holdings away from the dollar for years.
Central bankers recognize that gold represents stability and historically provides a safe haven for wealth. They are buying gold for the same reasons individual investors should consider investing in the yellow metal.
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