Russia and Turkey Lead Central Bank Gold Buying in 2018
Central Banks of Russia and Turkey add over 75 Tons Gold to Reserves in 2018.
Turkey continues gold buying spree begun in January 2017.
After selling 151.1 tons of gold in 2015 and 2016, the Central Bank of the Republic of Turkey bought back 148.7 tons of gold in 2017. Turkey added gold to reserves in each month of 2017. Turkey’s gold buying has continued in 2018 with a further addition of 17.5 tons in January and 8.7 tons in February. Turkey’s gold additions in 2018 have increased its gold reserves to 582.2 tons and vaulted it into 10th place ahead of the Reserve Bank of India whose holdings have been constant for years at 557.7 tons.
Part of Turkey’s incentive to buy gold is underscored by the extreme devaluation of its currency, the Lira. The price of gold vs. the Turkish Lira has nearly doubled over the past 26 months.
Earlier this week, Turkey also announced the repatriation of 220 of gold from the New York Federal Reserve.
Russia continues to lead the world’s central banks in gold acquisition in 2018
The Russian Central Bank announced this week that its gold reserves had reached 60.8 million troy ounces (approximately 1,891 metric tons). The total included an additional 300,000 ounces (approximately 9 metric tons) of gold added in March.
In 2017, the Russian Central Bank added a record 7.2 million ounces or approximately 224 tons of gold to reserves. Over the past two years, Russia has led the world in adding gold to her central bank reserves, ahead of the People’s Bank of China, the central bank that has added the second largest of amount of gold. Indeed, in 2017 the Russian Central Bank’s gold holdings surpassed the People’s Bank of China’s gold reserves to take sole possession of fifth place among the gold holding nations of the world.
The Central Bank of Russia added 208 tons of gold to reserves in 2015. In 2016, Russia added 199 tons of gold to her reserves.
As a result of Russia’s gold buying binge, Russia has vaulted into fifth place among holding nations, passing China earlier this year.
In addition to increasing its gold hoard, Russia’s overall foreign reserves have grown from $371 billion in January 2016 to $457.995 billion as at March, 2017.
As of March 2018, gold constituted about 17.5% of the Central Bank of Russia’s $457.995 billion reserves with her gold hoard valued at approximately $80.482 billion, up from $52 billion or 12% of overall reserves as at August 31, 2016.
U.S. Treasuries as Part of Russia’s Foreign Reserves
In February 2016, Russia’s U.S. Treasury position was $93.8 billion. In January 2014 Russia held $131 billion in U.S. Treasuries. In reaction to U.S. inspired sanctions being placed on her, Russia has sold a substantial portion of her U.S. Treasury holdings. Russian U.S. Treasury holdings reached a low of $66.5 billion in April 2015. As of February 2018, Russia held $96.9 billion in U.S. Treasury Securities the same amount as held in January 2016.
Russian gold mining helps boost gold reserves, exports
Russian gold mining produces the second largest annual output in the world behind China. Russia adds a substantial percentage of its domestic mining production to her reserves. By retaining a large percentage of its gold mining output the Central Bank of Russia has been in effect converting Roubles into gold. Russian recently announced that it would sell gold mined domestically that is not added to reserves to China and India.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.