For the past many years Russia and China have shared a common trend – the accumulation of gold. Russia and China have been the leading official sector gold buyers over the last 15 years, but for the past few months especially the two countries have begun increasing their accumulation of gold. Let’s take a look into Russia and China’s reasoning and recent gold accumulation trends.
According to an article by Bloomberg posted in February, Russia’s gold reserves climbed 46.2 million ounces from 45.5 million in December. During an interview in the article with Jeffery Nichols, a New York-based senior economic adviser to Rosland Capital LLC, he states “The Russian central bank is similar in some sense to the Chinese central bank. They’re acquiring gold for strategic and political gain, with the hopes that their currencies will look more attractive if they have larger gold reserves.” According to a separate article published by Reuters, Dmitry Tulin, the monetary policy manager at Russia’s central bank, said “As you know we are increasing our gold holdings, although this comes with market risks. The price of it (gold) swings, but on the other hand it is a 100 percent guarantee from legal and political risks.”
Similar to Russia, China has done quite a lot of gold accumulation of its own. The Wall Street Journal stated in an article published in December that after six years of withholding information regarding its gold accumulation, the People’s Bank of China disclosed that its holdings of gold had risen by more than 50% since 2009 to 1,658 metric tons. The article then continues to say that China’s central bank has continued accumulating gold, its reserves climbing another 5.1% to 1,743 metric tons. The article then goes on to state that “Analysts say the central bank likely has a few motives, including a desire to plow its vast foreign-exchange reserves into a broader range of assets and to follow other leading global central banks in building up gold reserves as a store of value.”
Russia and China appear to be no different than many other countries in at least one way, they both are seeking investments to ensure long lasting countries and economic stability and it is clear these two countries see gold as an invesntment that can provide future stability.
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My objective is to share with you my views on gold, which in recent decades has become one of the world’s most misunderstood asset classes. This low level of knowledge about gold creates a wonderful opportunity and competitive edge to everyone who truly understands gold and money.
