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Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

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Russian Gold Reserves Hit Record High Amid Rising Tensions With West

Gold

When bars of gold came flying out of a cargo plane taking off from a Siberian airport earlier this month, littering the run-way with precious metal, it was more than symbolic: Russia is hoarding gold, and it’s apparently got so much it can’t keep it contained.

Russia’s been hoarding gold for a while—but it’s going for a new record in 2018, dumping U.S. treasuries for gold at a rate not seen in years as it overtakes China for fifth place among the world’s sovereign holders of the precious metal.

(Click to enlarge)

Source: Tradingeconomics

And the trajectory is set to continue upwards:

(Click to enlarge)

Last year, Russian gold reserves hit a historic high, with the Russian Central Bank reporting a record 223 tons added to the hold in 2017. December saw the Central Bank push its reserves to 1,838.211 tons—or $76 billion.

In February this year, Russia overtook China, reaching 1,857 tons, against China’s 1,843 tons.

Between March 2 and 9 alone, Zerohedge reports, the CBR’s gold reserves spiked to $455.2 billion.

Russian and Chinese gold hoarding is very much about cutting dependency on the US dollar, and every move is accompanied by major publicity, with both Moscow and Beijing calling gold a strategy monetary asset, precious metals expert Ronan Manly told Russian RT. “But on the flipside, the US does the opposite, and constantly downplays the strategic role of gold.”

But Russian hoarding is the one to watch. As Bloomberg reports, Russia has increased its holdings every month for three years running, while China hasn’t reported any gold-buying since the third quarter of 2016. Related: Tech Giants Could Be First Victims Of U.S. Trade War

Geopolitical tensions are likely to push even more Russian gold-hoarding, as countries line up to back the U.K. in the wake of the poisoning of an ex-Russian double agent and his daughter on British soil.

British Prime Minister Theresa May has accused Russia of orchestrating the assassination of the two, which used a nerve toxin in a form attack that has not been seen since World War II. Moscow denies any involvement.

London has expelled 23 diplomats who left the country on Tuesday, as this crisis escalates to massive geopolitical proportions.

The diplomatic standoff is reaching a dangerous level of no return, with France, Germany and the U.S. backing the UK with a joint statement last week, saying: “The UK briefed thoroughly its allies that it was highly likely that Russia was responsible for the attack. We share the UK assessment that there is no plausible alternative explanation.”

When it comes to war, gold hoarding is right up there with munitions stockpiling, and that’s exactly why Russia views the precious metal as a definitive strategic monetary asset. The more gold it has, the less dependence on the dollar it has—and the less vulnerable to both enemies and allies when things spiral out of control.

And Russia isn’t only hoarding gold—it’s shedding U.S. treasury securities. According to RT, Russia dumped $5.3 billion in U.S. treasury securities in January alone, and now holds the lowest level of American debt since February last year.

By Charles Benavidez for Safehaven.com

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  • Flash9 on March 23 2018 said:
    Putin tried to corner the uranium market, it is down over 50%. He was betting on $100 + oil, oops again. So is he betting on gold now? Well, he can't always be wrong.
  • Flash9 on March 25 2018 said:
    Putin is a great market timer. Uranium at double what is now. $200 oil and $3000 gold.
  • Flash9 on March 25 2018 said:
    Ifmthey are buying that gold, they have lost a lot of money.
  • Robert Happek on March 27 2018 said:
    The Russians are buying gold mined in Russia paying for it with rubles - Russian paper money which has no value in the west. If they would not do that, that gold would be sold for Dollars on international markets. Doing so, they can keep the billions of Dollars they earn by selling gas and oil in invest them in US Treasuries. As a matter of fact, the Russian gold hoard at present gold prices, is roughly $80 billion. In comparison, the Russian holdings of US Treasury bonds are more than $100 billion.

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