Russia continues to buy gold: 700,000 troy ounces in October

Russia added 700,000 troy ounces of gold to its reserves in October, according to the latest Figures that the central bank recently put out there. With this purchase, the country's gold reserves grow to just over 1,800 tons. The central bank valued the precious metal in October at a Gold price of $1,273 per troy ounce, which means that the total gold reserve is worth about €73.7 billion.

Since 2006, the central bank of Russia has added gold to its reserves almost continuously. Due to the increase in commodity prices, the proceeds of exports increased, giving the country more resources to buy gold. In just over ten years, the gold reserve grew from less than 400 to 1,800 tons. Currently, the central bank holds more than 17% of its total reserves in the precious metal, compared to only 2.5% ten years ago.

Gold stock Russia since 2002

Russia keeps buying gold

Russia sees gold as a strategic reserve

The following charts show that Russia is converting an increasing proportion of its foreign exchange reserves to the precious metal. The central bank sees the precious metal as an insurance against political risk, because it can be used in all circumstances.

Foreign exchange reserves, on the other hand, have a counterparty risk, because they are traded within the financial system. In the event of sanctions, bank accounts can be frozen, which also limits access to foreign exchange reserves can be hindered.

For example, shortly after the reunification of Crimea with Russia, the Russian central bank reportedly withdrew $115 billion in foreign exchange reserves from the New York Fed. Two weeks later, when the situation was found to be stable enough, Russia returned most of these reserves.

Total reserves of Russia since 1999

Russia stores more than 17% of its reserves in precious metals

Buying gold via the Moscow Stock Exchange

The central bank of Russia started this month with buy gold via the Moscow Stock Exchange. Until now, the central bank only bought the precious metal directly from other parties such as banks, transactions that take place outside the stock exchange and therefore have no direct influence on the gold price. But now that the central bank is also openly bidding for the precious metal, it can also influence the market price.

We are therefore curious about the figures that the central bank will release at the end of December, because then we will hopefully also gain more insight into the amount of gold it has purchased via the stock exchange.