• 4 days The New World Tax Order
  • 5 days Is Crypto Finally Ready To Pay The Piper?
  • 6 days Is It Time To Buy The Global Gaming Market Dip?
  • 9 days Even The Mafia Has A Millennial Problem
  • 11 days Zuckerberg Loses Billions in Social Media Outage
  • 12 days ‘Pandora Papers’ Leak Reveals More Financial Crime
  • 13 days US Retail Has A Major Supply Chain Problem
  • 16 days China Has Set Out To Crush Crypto...Again
  • 17 days Top Performing Cannabis Stocks of the Year
  • 18 days Millennials Could Power A 20-Year Bull Stock Market
  • 24 days The Million-Dollar Question: Will China Bail Out Evergrande?
  • 25 days 3 Restaurant Stocks In Full Recovery Mode
  • 25 days Bitcoin Is Driven By Testosterone
  • 30 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 31 days How To Invest In The Cybersecurity Boom
  • 33 days Investors Are Patient With Unprofitable Giants
  • 35 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 37 days 5 Stocks To Keep A Close Eye On This Year
  • 38 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 39 days Central America Is Ready For The Bitcoin Hustle
Why Russia Is Trading Influence For Profit In Africa

Why Russia Is Trading Influence For Profit In Africa

While Russia has been playing…

The Countries With The Largest Diamond Reserves

The Countries With The Largest Diamond Reserves

Diamonds reserves in Russia, Congo…

Cannabis Has Become A Real Estate Selling Point

Cannabis Has Become A Real Estate Selling Point

Americans spend a whopping $40…

  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