Wednesday, March 3, 2010

Is Russia Vying to Buy the IMF Gold For Sale?

The First Deputy Chairman of Russia's Central Bank stated in an interview with Izvestia, one of Russia's most circulated newspapers, that the Central Bank wants to increase its gold holdings.  Here's the quote from Bloomberg News, which was confirmed by an official at the Central Bank (Bank Rossii): 
Russia’s central bank wants to increase the share of gold in its international reserves, First Deputy Chairman Alexei Ulyukayev said in an interview published in Izvestia today. His comments were confirmed by a Bank Rossii official. Here's the Bloomberg link:   Link
(click on chart to enlarge)

In January, the latest month for which data is available, the Russian Central bank increased its gold holdings by 800,000 ozs (approx. 22 tonnes), or 4.1%, to 20.5 million ounces (approx. 582 tons).  This represents roughly 5% of Russia's foreign reserves.  Typical Central Bank gold holdings globally are around 10% of reserves.  When the world was on the gold standard, Central Banks held 40% of their reserves in gold.

Russia's gold holdings have increased 57% since Jan 2007 and 22% from a year ago.  There is no doubt that Russia is seeking to rapidy accumulate gold.  Seems to be an Eastern Hemisphere trend.  Here's is graphic portrayal of the growth in Russia's gold reserves thru November 2009.  This is from Richard Nachbar's

On another note, the ECB showed no change in its gold holdings for the 4th week in a row.  The ECB has been a steady seller of gold for over a decade and this is the first time in the 11-year history of the Washington Agreement, which regulates ECB gold selling, that the ECB has remained dormant with respect to selling gold. 


  1. Dave, OT: after the runup in mining shares over the past week or so, do you think it better to wait for a pull back to buy? I've been wanting to add to my shares, but the market has gotten away from me. Thanks.

  2. Good question. But if I knew the answer to that I would be trading only my own money from a stucco chateau on a nice Caribbean island. LOL

    We added quite a bit of shares to our fund yesterday and a little today. One thing I've learned with this sector is that momentum in one direction usually takes on a life of its own for awhile and if you wait for a pullback you won't get invested.

    Remember, cyclically speaking, this is on average strong historical period for gold/mining shares thru April/May.

    Maybe take 1/3 or 1/2 of what you want to put to work and if we pullback, put another 1/3 to work. That way if this continues, at least you have some invested. I don't advise going on margin and I always like to leave 5%-10% at least in cash in case an accident appears out of nowhere and the whole market gets slammed.