The Battle of the Bullionaires – Russia Leading China in Race for Gold Reserves

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1902-russia-5-roubles-revRussia has just overtaken China as the world’s fifth-biggest holder of gold reserves. In January, the Bank of Russia boosted its holdings of the precious metal by almost 20 tons, reaching 1,857 metric tons, thus overtaking the People’s Bank of China, which reported 1,843 tons.

While both Russia and China have been buying gold on the open market, Russia has also been adding to its reserves from local producers. The country possesses the world’s largest known gold deposits estimated at some 12,500 tons.

The last time China reported topping up its gold was in March 2015, whereas Russia has topped its hoard every month since March 2015. It is worth noting that Russia is also the world’s third-largest miner of the metal, according to research firm Metals Focus, and it purchases mostly locally produced gold – something which allows for more independence from the U.S. dollar amid U.S.-imposed sanctions.

Both Russia and China seem keen on increasing their gold reserves with the possible ultimate aim of announcing they each possess larger reserves than the U.S. Treasury. Given the current rate of acquisition, this could occur by 2023. It remains uncertain what reaction this would cause in terms of the perceived value and security of U.S. dollar and stocks; however, it is unlikely to be favorable.

 

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