Central Banks of Russia/Kazkahstan Slow Gold Purchases as Other Central Banks Increase and Add to Gold Reserves

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The Central Bank of Russia added 300,000 ounces of Gold to Reserves in each of October and November and Kazakstan hasn’t added gold since August.

More Central Banks Join The Gold Buying Party

Over the past 18 months central banks of Turkey, India, China, Serbia, Poland, Hungary, Albania, Columbia and Mongolia have added gold to their reserves. Many of these countries had not added gold to their balance sheets for years or even decades.

In contrast for the past five years, the Central Banks of Russia and Kazkahstan have been adding increasing amounts of gold to their reserves. This trend has abated over the past three months, with the Russians and Kazakhs continuing to add gold, albeit at a slower pace.

The Central Bank of Russia, despite its lower pace of gold additions in 2019, is still the five year and 2019 leader in gold acquisitions among central banks this year.

The Central Bank of Russia has the world’s third largest gold mining production of any nation. Russia has been putting that gold mining production increasingly to bolster its own gold reserves. In 2017 and 2018, Russia added approximately 85% of domestic gold mining production to reserves up from 35% in 2008. In 2018 Russia mined 314 tons and put 272 of those tons into the Central Bank of Russia.

Russian continues to lead the world central banks in gold acquisition. In 2018 the CBOR added a record 271 tons to her reserves and continues to add prodigious amounts of gold to reserves through November 2019, albeit at a slower pace than last year as the chart below show.

The Russian Central Bank announced recently that its gold reserves had reached 72.7 million troy ounces (approximately 2,261 metric tons). The total included an additional 300,000 ounces (approximately 9.33 metric tons) of gold added in November.

With the world’s third largest gold production and facing sanctions from the United States and Europe over the past few years, the Central Bank of Russia has increased its foreign reserves to over $500 billion, largely by increasing their gold reserves, which now account for nearly 21% of overall reserves.

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.

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 continues to add gold to reserves at a faster pace than the People’s Bank of China.

In 2018, the Russian central bank added about 271 tons of gold, the largest amount ever added. Through November 2019, the Central Bank of Russia has added over 135 tons of gold to reserves.

The Central Bank of Russia has been adding an average of over 200 tons of gold to reserves the past few years.

As a result of Russia’s gold buying binge, Russia has vaulted into fifth place among holding nations and should over take France and Italy within two years assuming Russia continues to add gold to reserves at the pace of the past five years and France and Italy continue NOT to add gold to their reserves.

The Central Bank of Russia holds over 2,260 tons of gold.

In addition to increasing its gold hoard, Russia’s overall foreign reserves have grown from $371 billion in January 2016 to $530.922 billion as at September 2019, a 43% increase.

As of November, 2019, Russia’s 2,261 tons of gold constituted about 20.3% of the Central Bank of Russia’s $540 billion reserves with her gold hoard valued at approximately $102.246 billion, up from $52 billion or 12% of overall reserves as at August 31, 2016.

The Central Bank of Russia has added almost 37 million ounces (approximately 1,150 tons) of gold to her reserves from June 2014 – October 2019.

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Alan Greenspan said recently that “Gold is currency… the premier currency, no fiat currency, including the dollar, can match it”. 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 its currency, the rouble, into gold.

Russian Gold Reserves data: Central Bank of the Federation of Russia

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This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.

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