Gold – To Russia with Love

Listeners to our weekly wrap radio broadcast will know of the monthly gold purchase updates from Russia’s central bank however something happened this week that deserves special consideration.  The head of their central bank told the lower house of parliament they had purchased 150 tonne of gold this year (far in excess of World Gold Council’s recent report) taking gold to 10% of their reserves, up from 77 tonne last year and pushed gold back over USD1200 in reaction.  Such an announcement is unprecedented and appears to be a pointed geopolitical message to the west.  Unsurprisingly then, they yesterday announced their October purchases were 600,000 ounces taking total reserves to 37.6m oz.  Per the graph below September was already a 14 year high record month with 1.2m oz purchased.  In reaction to the economic sanctions, it is widely understood Russia has been buying gold as part of its de-dollarization strategy and to support the Rouble which has declined by around 30% causing about 9% inflation.  An interesting situation as the Swiss consider a topical referendum…