Russia’s central bank is reported to have been buying gold at an unprecedented rate. To be more specific, the IMF reports that the central bank purchased 11 tons of gold last month. Given the fact that the People’s Bank of China is still number one in terms of buying gold, the Central Bank of the Russian Federation comes second after its Chinese counterpart. Still, some experts say that the gold purchase stats provided by the People’s Bank of China cannot be seen as reliable since there is no transparent way to confirm those stats. With that being said, Russia may be close to be the biggest buyer of gold to date.
As for the People's Bank of China, it used to purchase U.S. bonds rather heavily. These days, Chinese central bankers are trying to reduce their exposure to the U.S. debt market by getting rid of as much of those U.S. bonds as they can. By the way, Kazakhstan is another heavy buyer of gold. Over the same reporting period, the local central bank purchased 2.6 tons of gold.
It is also interesting to note that Turkey seems to be one of the biggest sellers of gold to date. Last month, they sold 7 tons out of 37,3 tons of gold they had. At the same time, Canada is reported to have sold all most the entire reserve of gold despite being of the biggest gold producers. With that being said, almost 100% of the produced gold eventually comes to the global market. For some of you it may sound shocking but the Central Bank of Canada has only 100 ounces of gold left.
Anyway, experts say that Russia cannot still influence the international market of gold by heavily purchasing the precious metals. At the same time, there is no information on where exactly the purchased gold came from. Most likely, the Russian central bank keeps on purchasing the gold produced by local gold miners. This is he most likely scenario since it makes it possible to kill 2 birds with one stone.
First off, the central bank makes its gold reserve bigger, which is good for the bank, the economy and the national currency. Secondly, the Russian gold mining industry gets a reliable outlet amid today's sanctions and Russia's image of an economic and political outcast. It is interesting to note that last year, the consortium of Russian gold miners addressed the central bank and asked it to purchase the entire annual volume of the gold they had mined or roughly 290 tons of gold. As a result, the Russian central bank purchased 240 tons of the gold. Some experts say that this step was designed to smoothen the interest rate hikes seen at that time. By the way, in 2014, the bank also purchased 170 tons of gold while the rest was bought by several E.U. financial institutions.
