The Central Bank of Russia buys gold to diversify.
Since 2005, Russia has tripled its gold reserves, and according to the International Monetary Fund it currently holds a total of 1,238 tons.
The Governess of the Central Bank of Russia, Elvira Nabiullina, claimed in an interview with Geoff Cutmore from the CNBC, that the monetary institution she leads will continue buying gold to diversify.
It is estimated that in 2014 Russia officially bought 156 tonnes of gold, a lot more than the 77 tons that they bought the previous year. The country went through difficult times last year; plummeting oil prices and Western sanctions devalued the ruble by 46%, to a record of 80 rubles per 1 US dollar. Inflation has risen 11.4%.
Over the past decade, the Russian Central Bank has steadily increased its official gold reserves. According to the International Monetary Fund, since 2005 Russia has tripled its reserves to a total of 1,208 tons, the most quantity since, at least, 1993.
When questioned over the increase in buying significant amounts of gold when dollars, euros or other currencies could be bought to boost their reserves, the Governess of the Central Bank of Russia said during the interview that she believed in the foundations and principles of diversification of international reserves. “We have not only bought gold last year, but previous years as well. Our industry is very well developed and ready to supply the metal. ”
Asked whether Russia was buying gold to support their domestic gold mining industry, Elvira Nabiullina answered that the goal of her country wasn´t to support any particular sector, and stated that the Russian gold reserves could be considered rather small when compared to those of other countries. “In terms of percentage of gold we are not at the top of the list, other countries have higher proportions of metal in their reserves.”
Cutmore questioned Elvira Nabiullina about her vision of Bitcoin as a currency or medium of exchange, and if it could be considered a reserve currency. While Nabiullina was quite positive about the cryptocurrency, she completely ruled out the possibility of using Bitcoin as a reserve.
“We are studying how the market develops, detected certain risks, and have warned about them to every participant. There are indeed certain advantages for consumers such as mobility, low cost and convenience, so we will continue monitoring closely and will regulate if necessary “.
The Russian economy, she said, can be considered “quite stable” despite Western sanctions. “We have gold monetary reserves, and we have introduced a floating exchange rate to absorb various negative impacts,” said Nabiullina during the interview.
Jim Rickards, a world expert in gold, financial markets, author of the book Currency Wars and US intelligence adviser, said earlier this year when China revealed its true gold reserves these would become “a dagger pointed in the heart of the dollar. ” China has not reported its official gold reserves for six years. The last time he did in April 2009 claimed to have 1,054 tons.