Gold pays off big-time for Russias central bankPosted on — Leave a comment
Russia solidified its status as the biggest buyer of gold among the worlds central banks with a 356,000-oz. purchase of bullion in February, according to the business daily Vedomosti.
And Moscows massive bet on the yellow metal has paid off: Golds biggest quarterly surge since 1986 has all but erased losses the Bank of Russia suffered by mounting a rescue of the ruble more than a year ago, Bloomberg reported. Policy makers have instead used 13 months of gold purchases to take reserves over $380 billion for the first time since January 2015.
Russias purchases are all part of an ongoing trend in which central banks have amassed the second-highest annual total of gold bullion since the end of the gold standard, the Financial Times reported.
The newspaper was summarizing the findings of the latest annual Gold Survey from precious-metals analytical firm GFMS, which calculated that net purchases by central banks in 2015 hit 483 metric tons. Russia alone was responsible for 206 tons as it looks to diversify away from the U.S. dollar due to tensions with the West.
Meanwhile, China added 104 tons of its own in the second half of 2015. Russia and China are real standouts, GFMS analyst Ross Strachan noted.
The tide turned around 2010 thats when the roughly two-decade trend of central banks selling gold reversed and those same institutions became net buyers as a means of protecting themselves against rampant money printing by the Federal Reserve and other top banks.
The central-bank buying trend shows no sign of abating and should continue to offer support to the gold price.