Will There Be Forced Official Sellers of Gold? |.
Possible Side-Effects of Plunging Commodity Prices – A Look at Russia
One of our readers wrote to us with a question on a topic that will surely be of interest to a wider audience. Here is what he asked:
“As FX reserves dwindle, surely there is some potential that Russia may be forced seller of Gold? I understand your views re gold market, but would be most interested to hear your thoughts on the possible impact? Are there other options? Talk of gold backed RUB, default on USD debts, etc.
It is clear that a number of major oil producers are in severe trouble. However, Russia’s central bank has actually increased its gold reserves in recent months. It is now the world’s 5th largest official holder of gold, after increasing its stock pile to 1,150 tons in September (the most recent data available).
To this it must be kept in mind that Russia itself is a major producer of gold, the third largest in the world in fact, mining about 250 tons per year. The central bank is involved in the marketing of this gold, acting as an intermediary for producers. Still, in spite of increasing its gold reserves quite a bit, they still only represent about 10% of Russia’s total reserves. Here is by the way a chart of gold in ruble terms:
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