As you know, in recent years Russia has been one of the main buyers in the gold market. Now this is to change. Why?
Russia and gold
The Central Bank of Russia (CBR) has decided to change its strategy. In April he no longer bought an ounce of gold. Thus, it ceased to increase its reserves for the first time since December 2016. According to data from the World Gold Council, in April Russian reserves fell by almost 400 kg and are now at the level of 2,228.7 tonnes.
– From April 1, 2020, the Central Bank of Russia suspends gold purchases on the domestic market. Future decisions regarding gold purchases will depend on the situation on the financial markets – announced the bank in its announcement, which was published on the institution’s website.
It is interesting because in recent years CBR was one of the largest buyers on the gold market. The central bank began mass shopping after the crisis of 2008-2009. The trial lasted a decade. The effect was to increase the state of Russian gold reserves from 500 to nearly 2,300 tons.
Thus, the power advanced from the ninth to the fifth place in the ranking of countries with the largest reported gold reserves. This meant a leap of China, the Netherlands, Japan and Switzerland.
Countries with the largest gold reserves:
10. The Netherlands
Change of strategy
It is not known why such a sudden change in strategy. Has the bank decided that the price is already too high, so we have a strong discount? In the context of the monetary policy of the Fed and other monetary authorities, this is questionable. After all, crazy reprints of currencies will lead to an increase in inflation over a few months, and thus a jump in the bullion rate, which is considered a safe haven (gold will certainly be one of them). It is also unknown why Russia sold part of its reserves. Possible for the same reason as described above.
Over the past five years, the country has allocated $ 40 billion to buy gold. Today, ore already accounts for 22.2 percent. the country’s foreign reserves. This is more than in the case of Japan (3.1 percent), Switzerland (6.7 percent), China (3.3 percent) or Great Britain (9.8 percent)