Live Metal Prices / oz
Gold: 1819.97 USD
Silver: 23.01 USD
Platinum: 970.50 USD
Palladium: 1877.50 USD
Rhodium: 12099.99 USD

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Why Russia is Becoming the Biggest Gold Buyer in the World

Russia's national gold reserves exceeded the value of its US Dollar holdings for the first time in history last year. Russia owned $128.5 billion in gold at the end of June 2020, accounting for 22.9 percent of Moscow's total overseas reserves. This is about $4 billion higher than the value of its US currency holdings.

Russia has actively switched its foreign reserves away from US Dollars and toward gold and other currencies during the past three years, and Russia is still hoarding gold without showing any signs of stopping.

Russian Gold Reserve Explosion in 2020

According to figures from Russia's central bank, the country's total gold reserves as a percentage of foreign currency holdings were at 22.9 percent as of June 30, 2020. By contrast, US Dollar holdings fell to 22.2%.

The central bank stated on Monday that its gold reserves had increased to $128.5 billion, up from $124.6 billion in US Dollars. Euro holdings fell to 29.5 percent, while Chinese yuan holdings fell to 12.2 percent. This data was released six months after the fact.

Russia ceased gold purchases in April, leaving overall stockpiles at 73.9 million ounces. The reason for the rise in the value of gold reserves is that the price of gold increased by 25% in 2020.

Increasing Gold Reserve in 2021

Russia's international gold and foreign currency reserves increased to a record $615.6 billion after receiving a tranche from the IMF in the third quarter of the year 2021. In late August, the IMF distributed around $17.5 billion to Russia as part of the worldwide $650 billion SDR allocation, which was the IMF's biggest transfer of monetary reserves in history.

Russia's gold and foreign exchange reserves, which rank fourth in the world right now, increased by $20 billion in the week ended Aug. 27, according to the weekly report of the central bank in September.

Nations may use their SDR allocation to assist their economies or to trade with other countries, however they should not utilize fiscal space to postpone necessary economic reforms or debt restructuring, the IMF has stated.

Reason Behind Russian Gold Hoarding

Russia's gold holdings increased in value in 2020 as the precious metal's price skyrocketed in the early months of the coronavirus outbreak. Russia's gold stockpiles are expected to have climbed further throughout the summer since prices reached a record high in early August.

After years as the world's top gold importer, Russia reduced its purchases at the start of last year and altogether ceased purchasing in March 2020, at the height of the epidemic. 

Conclusion

Russia has spent more than $40 billion over the last five years amassing a war chest of gold, making it the world's largest buyer. The central bank said that it ceased gold purchases in the first half of last year to motivate miners and banks to increase exports and foreign currency inflows into Russia after the collapse of oil prices.