The Central Bank of Russia has recently been buying bullion at an unprecedented pace. According to Argentine financial expert Gabriel Rubinstein, this policy is aimed at protecting the Russian economy in the event of crisis situations, including against dollar-related “manipulations” by the US.
“Countries stockpile gold for strategic and defensive reasons; for instance, in case relations between nations are damaged and their currencies lose their value,” Gabriel Rubinstein, a financial consultant and former representative of the Argentine Central Bank, told Sputnik Mundo.
If there is such a situation, according to the expert, gold reserves would be the basis for a new currency or other valuable assets in the future.
“Gold, this eternal financial resource, has a real value if compared to other financial assets. The Russian government believes that it’s better to have more gold resources than dollars. Hypothetically speaking, if Russia holds tons of US dollars and the US wanted to damage its economy, this would be possible through currency manipulations,” Rubinstein said, adding that gold guarantees against such a scenario.
The Russian Central Bank has significantly increased the pace of its gold purchases. In the period between January and September 2017, the regulator bought 4.2 million troy ounces of the precious metal worth over $5 billion, 15 percent more than in the same period last year.
As of October 1, the Russian Central Bank holds $73.6 billion in gold reserves, compared with $65.5 billion a year ago, according to its data.
Russia increased its purchases of bullion after sanctions were imposed by the United States and the European Union following the 2014 referendum in Crimea and the beginning of a military conflict in eastern Ukraine. Since then, according to the World Gold Council, the Russian Central Bank has been adding some 100 tons to its gold reserves each six months, more than any other central bank in the world.
Currently, Russia is the world-seventh largest holder of bullion, and if the current pace of its gold purchases continues it is likely to move to the sixth place, surpassing China with its current reserves of 1,842 tons.
During the past decade, the Russian Central Bank has changed its gold and foreign exchange reserves management policy, including decreasing the share of euro from 40 to 26 percent and increasing its gold reserves from $8 billion to $73.6 billion as of October 1 of this year.
Published in sputniknews.com