Russia bought 31 tonnes of gold in January

Russia has 31.1 tonnes of gold in its reserves in the first month of the new year added, according to the latest figures from the Russian central bank. The country now has a gold reserve of 1,645.37 tonnes, good for sixth place in the ranking of countries with the largest gold reserves. The total gold reserve is valued at $62.93 billion on the balance sheet, representing nearly 16% of the central bank's total reserves.

Since the outbreak of the financial crisis in 2008, central banks have been looking positively at gold again. Western central banks stopped selling gold, while emerging economies such as China, Russia and India added hundreds of tons of gold to their reserves. In fact, in just over a decade, the Russian central bank has quadrupled its gold holdings, as the chart below shows.

Russia continues to buy gold, adding another 31.1 tonnes in January

Russia buy gold

The central bank of Russia sees gold as a valuable diversification, as the precious metal is free from counterparty risk and currency risk. In recent years, the country has added precious metals to its reserves almost continuously, regardless of the development of the Gold price.

The chart below shows at a glance how the central bank of Russia has gradually shifted its focus of currency reserves to gold in recent years. At the outbreak of the crisis in 2008, the precious metal represented only 2% of total reserves, now it is already 16%.

Gold and foreign exchange reserves Russia

Diversification

Central banks buy gold as a form of diversification against currency risk. The dollar is still the world's reserve currency, but in a globalizing world this is causing more and more problems. To reduce exposure to the dollar, emerging markets are adding other currencies and gold to their reserves, making them less dependent on the U.S. currency.

Russia has been valuing its gold holdings since 2006 according to the current gold price. Before then, it was valued at a historic fixed price of $300 per troy ounce. The ECB and the People's Bank of China also periodically value the precious metal at market value, acknowledging that there is no longer a link between gold and money.