Russian Gold Reserves Now Exceed US$100 Billion

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Russia and China Both Continuing Gold Buying Spree To Wean Off US Dollar

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Russia’s gold reserves have exceeded US$100 billion for the first time, with the metal growing in value by 11 percent over the past two months. That latest hike has been spurred by the news that Chinese firms were awarded contracts for the construction of a gold smelter and two refineries in Tanzania, Africa’s fourth-largest gold producer.

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It is currently priced at @ US$1,428.75 an ounce as of yesterdays trading.

The Russian Central Bank has purchased 96.4 tonnes of gold since January this year, while China bought 74 tonnes of bullion in the six months through to May. Last week, the Russian Central Bank confirmed that the country’s total gold reserves had struck US$100.3 billion on July 1st, with 18 tonnes of the precious metal added to its stockpile in the month of June, for a total of 2,208 tonnes, amid recent efforts to de-dollarise its reserves. Russia’s gold buy-up has come alongside a substantial decline in its US debt holdings, with its US investments now standing at just US$12 billion, the lowest since 2007.

Crispin Odey, a hedge fund manager at the UK’s Odey Asset Management, has been quoted in Sputnik News as suggesting that “gold is the ‘natural move’ for countries looking to break with the hegemony of the US dollar.” His hedge fund has invested heavily into gold despite being skeptical of the metal in the past. “You have to do what the central banks are doing.”

Meanwhile, Brett Arends, of Market Watch has stated “Do China and Russia really need piles of this arcane yellow metal to break the US dollar’s stranglehold on the world’s financial system? Can’t they just issue new currency backed by their economic output, as Europe did when it launched the euro 20 years ago? Maybe, or maybe not. But that seems to be the way they’re betting. We are at a very rare inflection point in history: the passage of economic hegemony. China’s economy has already overtaken America’s by one key measure [national economic output], just as America’s once overtook Britain’s. These periods of transition, throughout history, have been times of instability.”

Russia’s gold reserves are now the fifth-largest in the world, and quickly catching up to third and fourth place holders Italy and France, who have an estimated 2,451 and 2,435 tonnes, respectively. The US and Germany have the largest reported gold reserves, with 8,133 tonnes and 3,381 tonnes, respectively. China’s gold holdings reached 1,916 tonnes in May this year, and is now the sixth-largest holder of the precious metal, and the second-largest buyer of the precious metal after Russia over the past two years.

 

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