Russia increases gold purchases in July

Russia’s
Prime Minister Vladimir Putin holds an ingot of gold as he visits
the precious metals safe vault of the Central Bank in Moscow
January 24, 2011.
REUTERS/Alexsey
Druginyn

• Russia has ramped up its gold buying, adding 26 tonnes
  to its reserves in July, according to International Monetary
  Fund data.
• That’s equivalent to roughly $1 billion of additional
  gold purchases.
• As Russia buys gold, it continues to sell US
  Treasuries, in response to sanctions first placed against the
  state in 2011 for its actions in Crimea.

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Russia is accelerating the rate at which it buys gold as the
world’s largest country continues to move away from traditional
asset holdings in response to renewed US sanctions.

According to International Monetary Fund data analysed by
Bloomberg, Moscow bought 26.1 tonnes of gold in July. That is
the largest single monthly purchase since late 2017 and gives
Russia a total of 2,170 tonnes of gold in reserve.

At current prices, those reserves are worth around $83.6 billion.
A Russian government website lists the value of the holdings at
around $77 billion at the end of July.

As Russia buys gold,
it continues to sell US Treasuries. The shift in strategy is
believed to be in response to sanctions placed against the state
in 2011 for its actions in Crimea. According to reports in July,
Russia has lowered its holdings of US debt from $96.1 billion in
March to $48.7 billion in April and then to just $14.9 billion in
May.

Moscow sees gold as a “100% guarantee from legal and political
risks,” Dmitry Tulin, first deputy governor of the Russian
central bank,
said when it was first revealed that Russia was selling off US
debt.

News of Russia’s increase gold reserves comes less than a day
after senior US officials made clear that the Trump
administration is ready to impose even harsher sanctions on
Moscow if it does not change its behaviour.

Christopher Ford, assistant secretary at the State Department’s
Bureau Of International Security And Nonproliferation, and Sigal
Mandelker, Acting Under Secretary of Terrorism and Financial
Crimes at the Treasury Department, told a Senate banking hearing
that the US is preparing plans to impose more economic pain on
Russia.

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