• 260 days Will The ECB Continue To Hike Rates?
  • 260 days Forbes: Aramco Remains Largest Company In The Middle East
  • 262 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 662 days Could Crypto Overtake Traditional Investment?
  • 666 days Americans Still Quitting Jobs At Record Pace
  • 668 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 671 days Is The Dollar Too Strong?
  • 672 days Big Tech Disappoints Investors on Earnings Calls
  • 673 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 674 days China Is Quietly Trying To Distance Itself From Russia
  • 675 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 678 days Crypto Investors Won Big In 2021
  • 679 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 680 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 682 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 682 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 685 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 686 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 686 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 688 days Are NFTs About To Take Over Gaming?
The Dollar Reigns Supreme In Times Of Crisis

The Dollar Reigns Supreme In Times Of Crisis

While gold and bonds are…

The Countries With The Largest Diamond Reserves

The Countries With The Largest Diamond Reserves

Diamonds reserves in Russia, Congo…

  1. Home
  2. Commodities
  3. Other

How Russian Gold Production Will Help Ditch The Dollar

Russia

Russia has been pro-actively trying to minimize its exposure to its American enemy No. 1 through a number of ways, including replacing the dollar in crude oil settlements as well as dumping U.S. Treasuries.

Russia has been cutting its holdings of U.S. debt by nearly half over the past six years, though it still remains one of the largest holders of U.S. Treasuries.

(Click to enlarge)

Source: Zero Hedge

Russia's decision (together with Iran and Turkey) to ditch the dollar in crude oil payments in favor of the euro was driven by what it termed as limited access to the greenback resulting from long-standing U.S. sanctions.

Russian Gold Rush

But in an even clearer indication of its intent to eventually ditch the greenback as its reserve currency, Russia has been bulking up its gold reserves at an unprecedented rate.

The country has been on a long unbroken streak of 39 consecutive months of gold additions, one of the longest by any government in the world.

Russia and China own some of the world's largest gold reserves.

(Click to enlarge)

Source: World Gold Council

But the giant gold producer is still not content with its torrid pace of accumulation, or its place as the planet's third-largest producer. Russia now aims to ramp up gold output by 50 percent over the next seven years and by nearly 100 percent by 2030.

Russia produced 8.8 million ounces of the yellow metal in 2017, good for 8.3 percent of global production and the third-highest in the world. Now it plans to increase production by another eight million ounces by 2030 thus matching the pace by China which has doubled its own output over the last 14 years. That will effectively make Russia the world's second-largest producer behind only Australia. Related: Gold Could Head Lower In Coming Weeks

Russia hopes to hit that goal by focusing more on the gold hubs of Amur and Magadan as well as the Siberian city of Irkutsk.

Minimal Impact on Gold Prices

Russia's ambitious gold program is, however, unlikely to have any major impact on overall world supply or prices.

The country's objective to double gold production by 2030 would lead to roughly half a percentage point increase in global production each year, ceteris paribus. That would hardly be enough to offset declining production elsewhere, let alone depress gold prices. Global production increased to 3,268.7 tonnes in 2017 up from 3,263 a year earlier. That marked the smallest increase since 2008.

Gold production in China--the world's largest producer, accounting for 15 percent of annual output--could already have hit a production plateau. In 2017, China recorded a nine-percent decline in gold output after nine consecutive years of increase. The decline was chalked up to tighter controls by Chinese authorities who have been closing down smaller mines, many of them deemed unsafe.

If anything, China's own output is unable to meet local demand, and the situation could get worse. The country produced 420.5 tonnes in 2017 compared to demand for 953.3 tonnes.

Further, the Beijing government prohibits Chinese gold companies from exporting any gold. China's sway on gold matters is even bigger than Saudi Arabia's on oil due to the former's larger control on production.

By Alex Kimani for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment