RUSSIA BUILDS UP GOLD RESERVES TO CREATE SAFETY NET FOR ECONOMY – ANALYSTS
[ Part 2.2: “Attached Text” ]
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February 04, 15:26 UTC+3
(C) Donat Sorokin/TASS
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TamaraZAMYATINA
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MOSCOW, February 4. /TASS/. Financial analysts polled by TASS attribute
Russia’s efforts to build up gold production and the CBR’s
(Central Bank of Russia) growing gold purchases to dwindling confidence
in the US dollar and a wish to establish a safety net for the national
economy.
On Tuesday, Natural Resources Minister Sergey Donskoy said:
“Russia’s gold production is soaring to new highs. According to
my estimates, the annual gold output will be up to above 300 tons in
2015. This will happen mostly with the involvement of gold deposits
in the Far East and in southern Siberia into production.”
At the moment, Russia’s gold reserves stand at 1,200 tons.
The Bank of Russia last year stepped up gold purchases considerably.
According to the WorldGoldCouncil (WGC), Russia since the beginning of
2014 built up its gold reserves by 115 tons. In contrast to this, in
2013, according to the CBR’s annual report, its gold assets went
up by 80 tons. As a result, according to CBR statistics, on January 1,
2015 monetary gold (rated according to the current CBR quotations)
stood at 39,989.9 troy ounces, or 10% of the country’s gold
and foreign exchange reserves.
“To say whether this amount – 1,200 tons – is big or small, one should
remember that various countries around the world have accumulated
approximately 22,000 tons of gold. The United States has the largest
gold reserve of all – 8,000 tons. Germany keeps 3.4 tons, France and
Italy, 2.4 tons each, and China and Russia, 1,200 tons each. In other
words, the wish to diversify the gold and foreign exchange reserves
is a general trend on the world financial markets, and Russia follows
it,” the head of Vneshtorgbank’s observer council, former CBR
governor Sergey Dubinin, told TASS.
“Growing gold production in Russia and build-up of the CBR’s
gold reserves is a sure sign the government’s financial segment
is keen to protect the available reserves from devaluation and other
negative phenomena stemming from the economic crisis and anti-Russian
sanctions,” Dubinin said.
“The dollar, just as the ruble, is credit money, with no gold
equivalent to rely on. The US authorities in 1976 abandoned the US
dollar’s pegging against gold, so certain distrust towards
the American currency remains. Gold is a highly liquid item taking
very little space to store. It is sold through electronic trading
and on finance markets, although its price is vulnerable to great
volatility. Nevertheless, respect for this precious metal, just as
to platinum, remains high. It is an investment instrument that has
stood the test of centuries,” Dubinin said.
“The gold has its weaknesses, though. It is not an alternative to
convertible currencies – the dollar, the pound sterling, the euro, the
yen and the Swiss franc. It is rather a safety net for the economy. It
is not accidental that China, while building up the production and
the amount of gold in its state vault, keeps $3.7 trillion in US
treasuries,” Dubinin said.
“The Central Bank is determined to strengthen the structure of its
international reserves by increasing the gold component. Gold as an
asset is rather stable during crises. Naturally, the CBR seeks to
increase its share by all means. The Central Bank’s intention
to ease Russia’s dependence on the dollar and the euro within
the framework of the gold and foreign exchange reserves is quite
reasonable in the current situation,” Deutsche Bank’s chief
economist in Russia, Yaroslav Lissovolik, told TASS.
“Russia today is one of the world’s leaders in terms of gold
reserves and judging by the CBR’s current policies, it has no
intention to quit its position,” he said.
“The Central Bank demonstrates its intention to increase the share of
gold in its reserves to the maximum extent and to minimize dependence
on foreign currencies, in particular, the mono-currency, the dollar.
The CBR has achieved a great deal in this respect: the dollar and euro
shares in its reserves are approximately equal. Also, considerable
assets in other currencies have been accumulated,” the president of
the Association of Russian Banks, Garegin Tosunian, told TASS.
“The intention to store more gold is reasonable not only for the
state, but also for the individual, because it is a reliable asset
“immune to corrosion”. Also, money emission and the stability of
the entire financial system depend on the size of gold and foreign
exchange reserves,” Tosunian concluded.