Daily Market Update

Russia Buys 800,000 Ounces Of Gold In July

– Russia buys 800k ozs of gold as diversifies reserves from USD
– Russia now has total gold reserves worth  just $76 billion; Dumped $90 billion of US Treasuries in April and May

–  25-ton addition brings Russia’s Central Bank holdings to 1,969 tons; the world’s 5th largest gold reserves
– Central bank buying Russian gold on Moscow Exchange for now
– Russia sees gold’s role as independent currency and safe haven as is a “100% guarantee from legal and political risks”

Russia under Putin continues to add to its gold reserves and added another 800,000 ounces or 25 metric tonnes in June. Many analysts believe this buying will continue in the coming months given the very serious geopolitical tensions between Russia and the U.S.

Russia’s total gold reserves now amount to 63.3 million ounces or around 1,969 metric tonnes, with a current value of just $76 billion (based on gold at $1,200/0z).

Foreign exchange diversification intensified in April this year and their gold accumulation is averaging over 20 tonnes per month. It is interesting to note that Russia dumped some $90 billion of US Treasuries in April and May – which is significantly more than the value of the entire Russian gold reserves, now worth $76 billion.

Russia’s total foreign exchange reserves are $458 billion and their gold allocation has risen to 17% of their total reserves – even at these depressed gold prices.

This ranks Russia in fifth place globally in terms of gold reserves behind the U.S., Germany, Italy, France, and China.

Russia is also ranked fifth now in terms of gold held as a percentage of total fx reserves. However, the share of gold in Russian foreign exchange reserves is much lower than in many other countries such as the U.S., Italy, and France.

Source: Wikipedia via WGC

The U.S. is believed to have over 8,400 metric tonnes of gold and no foreign exchange reserves. The U.S. gold reserves have not been audited since the 1950s.

In 2014, Russia bought more gold in than in any other year since the break-up of the Soviet Union.  The country acquired over 173 metric tonnes according to World Gold Council figures. Russia has bought 130 tons of gold so far in 2018.

Much of the gold bought may have come from Russian gold production which is currently at about 25 metric tonnes per month.

In 2017, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place.

Thus, the Russian central bank is generally consuming all of Russian gold production and sometimes having to import gold. Therefore, they currently account for all domestic demand for gold.

Russia is an increasingly wealthy nation with a growing middle class, thousands of millionaires and over a hundred billionaires including multi-billionaire oligarchs.

The Russian central bank, senior politicians and policy makers are all on record regarding the importance of gold as a form of financial protection. They believe gold  provides invaluable insurance against external factors. Dmitry Tulin, manager of monetary policy at the central bank said of gold

“The price of it swings, but on the other hand it is a  “100% guarantee from legal and political risks”.

Russian gold buying looks set to continue or increase given the heightened financial and geopolitical risks and due to Russia’s belief in gold as a form of safe haven money.

Related Content

Gold Buying Russia To Intensify Diversification On Trump ‘Unpredictability’?

Gold Bullion Is A “100% Guarantee from Legal and Political Risks” – Russia

Russia Buys Gold Bullion For “Principles Of Diversification” – Central Bank Governor


News and Commentary

Chinese, Asian and European Investors Invest In Gold As US Sells (Bloomberg.com)

Smart Money Chinese ETF Investors Buy Gold On The Dip (Bloomberg.com)

Gold prices extend gains as dollar sags after Trump remarks (Reuters.com)

Case for owning gold remains strong as global debt climbs – Perth Mint (Bloomberg.com)

Venezuela Adds to Chaos With One of Biggest Currency Devaluations Ever (Bloomberg.com)

Source: Bloomberg.com

The “End of Fiat Currency” and The “End of Empire” – David Morgan (RT.com)

Passive investing would have confounded Adam Smith (MoneyWeek.com)

What this star wealth manager thinks about the US bull market (MoneyWeek.com)

UK citizens invited to stock-pile food due to Brexit risk (RenegadeINC.com)

Luxury Apartment Sales Plummet In New York As Sellers “Capitulate” (ZeroHedge.com)

Gold Prices (LBMA AM)

20 Aug: USD 1,188.75, GBP 933.29 & EUR 1,042.41 per ounce
17 Aug: USD 1,176.70, GBP 925.59 & EUR 1,032.79 per ounce
16 Aug: USD 1,179.65, GBP 928.38 & EUR 1,037.74 per ounce
15 Aug: USD 1,186.70, GBP 933.10 & EUR 1,047.74 per ounce
14 Aug: USD 1,195.30, GBP 935.32 & EUR 1,049.11 per ounce
13 Aug: USD 1,204.40, GBP 944.85 & EUR 1,058.19 per ounce
10 Aug: USD 1,211.65, GBP 947.87 & EUR 1,056.44 per ounce

Silver Prices (LBMA)

20 Aug: USD 14.76, GBP 11.57 & EUR 12.93 per ounce
17 Aug: USD 14.66, GBP 11.54 & EUR 12.87 per ounce
16 Aug: USD 14.61, GBP 11.51 & EUR 12.85 per ounce
15 Aug: USD 14.83, GBP 11.66 & EUR 13.10 per ounce
14 Aug: USD 15.04, GBP 11.77 & EUR 13.18 per ounce
13 Aug: USD 15.18, GBP 11.91 & EUR 13.35 per ounce
10 Aug: USD 15.37, GBP 12.04 & EUR 13.41 per ounce

Recent Market Updates

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– This Week’s Golden Nuggets
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Mark O'Byrne
Executive Director


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