Russia Buys 900,000 Ounces Of Gold Worth $1.17 Billion In April

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Published : May 21st, 2014
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Category : Market Analysis

Today’s AM fix was USD 1,292.00, EUR 942.65 and GBP 764.81 per ounce.
Yesterday’s AM fix was USD 1,291.50, EUR 943.46 and GBP 767.56 per ounce.

Gold climbed $1.10 or 0.08% yesterday to $1,294.70/oz. Silver rose $0.03 or 0.15% to $19.42/oz.

Gold is marginally lower today at $1,293.50/oz and remains in lock down in an unusually tight range between $1,287/oz and $1,306/oz this week. Gold in Singapore, which often sets the price trend in Asia, traded at $1,292.23/oz prior to a bounce to just over $1,295/oz.


President Putin holds a London Gold Delivery Bar

Gold has been in a very narrow range between $1,283/oz and $1,310/oz for a month now. There are a lot of things going on underneath the surface of the calm gold market this month. That superficial calm is likely to give way in the coming days as we appear on the verge of a sharp move to the upside or downside once gold breaks out of the recent range.

A break below $1,283/oz is possible and this could see gold quickly fall to test longer term support at $1,200/oz. This is likely if the technical traders and computer manipulations continue to dominate. However, should physical demand pick up on rising geopolitical tensions and the return of Indian demand with the easing of import duties, gold should quickly challenge resistance at $1,385/oz and $1,418/oz.

Russia Buys 900,000 Ounces Of Gold Worth $1.17 Billion In April
The Russian central bank has again increased its gold reserves by another 900,000 ounces worth $1.17 billion in April.

Russia's gold reserves rose to 34.4 million troy ounces in April, from 33.5 million troy ounces in March, the Russian central bank announced on its website yesterday. The value of its gold holdings rose to $44.30 billion as of May 1, compared with $43.36 billion a month earlier, it added.

The following is a summary from Bloomberg of the April data template on international reserves and foreign currency liquidity from the Central Bank of Russia in Moscow:

Russia's gold & foreign exchange reserves remained virtually unchanged at USD 471.1billion in the week ending May 9. Russia’s reserves have fallen since the crisis began but remain very sizeable. The reserves include monetary gold, special drawing rights, reserve position at the IMF and foreign exchange.

The 900,000 ounce purchase is a lot of physical gold in ounce or tonnage terms but as a percentage of Russian foreign exchange reserves it is a very small 0.24%.

Gold as a percentage of the overall Russian reserves is now nearly 10%. This remains well below the average gold holdingas a percentage of foreign exchange reserves of major central banks such as the Bundesbank, Bank of France and the Federal Reserve which is over 65%.

The Russian central bank has been gradually increasing the Russian reserves since 2006 (see chart above). On average they have been accumulating 0.5 million troy ounces every month. Therefore, the near 1 million ounce purchase in April is a definite increase in demand.

This was to be expected given the very pronounced geopolitical tension with the U.S. and west over Ukraine. Indeed the TIC data shows that Russia has been aggressively divesting themselves of U.S. Treasuries.

Russian holdings of U.S. Treasuries fell very sharp, by nearly $50 billion, between October and March 2014 or nearly a third of Russia’s total holdings. Over half of the plunge came in March, when $26 billion was liquidated as western sanctions were imposed. TIC Data for April won’t be available until June and will make for very interesting reading.

Especially given the mysterious huge U.S. Treasury buying that is being done by little Belgium. This has analysts scratching their heads and has aroused suspicions that the Fed and or the ECB may be behind the huge Belgian purchases.


Russian Gold Reserves in Million Fine Troy Ounces - 1995-2014 - Monthly Chart (Bloomberg)

Russia has already made their intentions regarding gold very clear. Numerous high ranking officials have affirmed how they view gold as an important monetary asset and Putin himself has had many publicised photos in which he very enthusiastically holds large gold bars.

On May 25th 2012, the deputy chairman of Russia's central bank, Sergey Shvetsov, said that the Bank of Russia plans to keep buying gold in order to diversify their foreign exchange reserves. 

"Last year we bought about 100 tonnes. This year it will be less but still a considerable figure," Shvetsov told Reuters at the time.

The World Gold Council reported yesterday that central bank purchases were 70% above their 5-year quarterly average, led by Iraq and Russia. The Eurozone actually became a net buyer thanks to Latvia joining the single currency union, adding its gold to the Eurozone reserves as part of the Euro treaty.

Russia may be planning to give the ruble some form of gold backing in order to protect the ruble from devaluations and protect Russia from an international monetary crisis and the soon to return currency wars.

Russian central bank demand and indeed global central banks demand is set to continue as macroeconomic, monetary and geopolitical uncertainty is unlikely to abate any time soon. Indeed, it may escalate substantially in the coming months as we move into the next phase of the global debt crisis.

Follow GoldCore and GoldCore's Head of Research Mark O'Byrne on Twitter.

Data and Statistics for these countries : Belgium | France | Iraq | Russia | Singapore | Ukraine | All
Gold and Silver Prices for these countries : Belgium | France | Iraq | Russia | Singapore | Ukraine | All
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Mark O'Byrne is executive and research director of www.GoldCore.com which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth.
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I realise that is an enormous amount of gold I bought a week ago and I know its mind boggling for the average Joe to contemplate the size of that delivery lot, let alone the amount of dollars involved, so please try not to be envious of my years of hard work and thrift which has enabled me to accumulate so much money.
I am just trying to look after my family.
Just yesterday I personally bought, for cash…. 764,000,000,000,000 tons of gold.

That's 764 with a capital T.

Now I have to dig a whacking great big hole in my backyard under cover of darkness before anybody notices.
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You could be the king of the neighbourhgood. Misspelled with intention.
Let them dig for you.

http://www.sparknotes.com/philosophy/more/section4.rhtml
A good laugh too.

"Utopians have so much gold and silver that they use it to make their bathroom fixtures, and they scorn the metals rather than covet them. This way, if gold and silver are needed, such as to pay soldiers in wartime, citizens will not hesitate to turn them over."

And then them soldiers use the gold/silver to pay for goods and services from the Utopians.
Excerpt from Utopia, Book 2.

[UTOPIAN VIEW OF RICHES, GOLD, AND JEWELS]

All things appear incredible to us, as they differ more or less from our own manners. Yet one who can judge aright will not wonder, that since their constitution differeth so materially from ours, their value of gold and silver also, should be measured by a very different standard. Having no use for money among themselves, but keeping it as a provision against events which seldom happen, and between which are generally long intervals, they value it no farther than it deserves, that is, in proportion to its use. Thus it is plain, they must prefer iron to either silver or gold. For we want iron nearly as much as fire and water, but nature hath marked out no use so essential for the other metals, that they may not easily be dispensed with. Man's folly hath enhanced the value of gold and silver because of their scarcity; whereas nature, like a kind parent, hath freely given us the best things, such as air, earth, and water, but hath hidden from us those which are vain and useless.

Were these metals to be laid-up in a tower, it would give birth to that foolish mistrust into which the people are apt to fall, and create suspicion that the prince and senate designed to sacrifice the public interest to their own advantage. Should they work them into vessels or other articles, they fear that the people might grow too fond of plate, and be unwilling to melt it again, if a war made it necessary. To prevent all these inconveniencies, they have fallen upon a plan, which agrees with their other policy, but is very different from ours; and which will hardly gain belief among us who value gold so much and lay it up so carefully.

They eat and drink from earthen ware or glass, which make an agreeable appearance though they be of little value; while their chamber-pots and close-stools are made of gold and silver; and this not only in their public halls, but in their private houses. Of the same metals they also make chains and fetters for their slaves; on some of whom, as a badge of infamy, they hang an ear-ring of gold, and make others wear a chain or a coronet of the same metal. And thus they take care, by all possible means, to render gold and silver of no esteem. Hence it is, that while other countries part with these metals as though one tore-out their bowels, the Utopians would look upon giving-in all they had of them, when occasion required, as parting only with a trifle, or as we should esteem the loss of a penny.

They find pearls on their coast, and diamonds and carbuncles on their rocks. They seek them not, but if they find them by chance, they polish them and give them to their children for ornaments, who delight in them during their childhood. But when they come to years of discretion, and see that none but children use such baubles, they lay them aside of their own accord; and would be as much ashamed to use them afterward, as grown children among us would be of their toys.

I never saw a more remarkable instance of the opposite impressions which different manners make on people, than I observed in the Anemolian ambassadors, who came to Amaurot when I was there. Coming to treat of affairs of great consequence, the deputies from several cities met to await their coming. The ambassadors of countries lying near Utopia, knowing their manners,—that fine clothes are in no esteem with them, that silk is despised, and gold a badge of infamy,—came very modestly clothed. But the Anemolians, who lie at a greater distance, having had little intercourse with them, understanding they were coarsely clothed and all in one dress, took it for granted that they had none of that finery among them, of which they made no use. Being also themselves a vain-glorious rather than a wise people, they resolved on this occasion to assume their grandest appearance, and astonish the poor Utopians with their splendour.

Procession of the Anemolian ambassadors; from a 1730 French translation of 'Utopia'. Thus three ambassadors made their entry with 100 attendants, all clad in garments of different colours, and the greater part in silk. The ambassadors themselves, who were of the nobility of their country, were in clothes of gold, adorned with massy chains and rings of gold. Their caps were covered with bracelets, thickly set with pearls and other gems. In a word, they were decorated in those very things, which, among the Utopians, are either badges of slavery, marks of infamy, or play-things for children.

It was pleasant to behold, on one side, how big they looked in comparing their rich habits with the plain clothes of the Utopians, who came out in great numbers to see them make their entry; and on the other, how much they were mistaken in the impression which they expected this pomp would have made. The sight appeared so ridiculous to those who had not seen the customs of other countries, that, though they respected such as were meanly clad (as if they had been the ambassadors), when they saw the ambassadors themselves, covered with gold and chains, they looked upon them as slaves, and shewed them no respect. You might have heard children, who had thrown away their jewels, cry to their mothers, see that great fool, wearing pearls and gems as if he was yet a child; and the mothers as innocently replying, peace, this must be one of the ambassador's fools.

Others censured the fashion of their chains, and observed, they were of no use. For their slaves could easily break them; and they hung so loosely, that they thought it easy to throw them away. But when the ambassadors had been a day among them, and had seen the vast quantity of gold in their houses, as much despised by them as esteemed by others; when they beheld more gold and silver in the chains and fetters of one slave, than in all their ornaments; their crests fell, they were ashamed of their glory, and laid it aside; a resolution which they took, in consequence of engaging in free conversation with the Utopians, and discovering their sense of these things, and their other customs.

The Utopians wonder that any man should be so enamoured of the lustre of a jewel, when he can behold a star or the sun; or that he should value himself upon his cloth being made of a finer thread. For, however fine this thread, it was once the fleece of a sheep, which remained a sheep notwithstanding it wore it.

They marvel much to hear, that gold, in itself so useless, should be everywhere so much sought, that even men, for whom it was made, and by them hath its value, should be less esteemed. That a stupid fellow, with no more sense than a log, and as base as he is foolish, should have many wise and good men to serve him because he possesseth a heap of it. And that, should an accident, or a law-quirk (which sometimes produceth as great changes as chance herself), pass this wealth from the master to his meanest slave, he would soon become the servant of the other, as if he was an appendage of his wealth, and bound to follow it.

But they much more wonder at and detest the folly of those, who, when they see a rich man, though they owe him nothing, and are not in the least dependent on his bounty, are ready to pay him divine honours because he is rich; even though they know him at the same time to be so covetous and mean-spirited, that notwithstanding all his wealth, he will not part with one farthing of it to them as long as he liveth.
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Darankash
You are right. 28 tonnes.
It was my breakfast menu.
2200 avdp lbs per metric ton (tonne).
What is it they should avoid then as breakfast ? A possible health tip eventually ?
Because I keep my breakfast always very simple. A lot of coffee and quite some smokes while imagining scrambled eggs/crispy bacon/Heinz rpt Heinz baked beans in tomato sauce/baked potatoes...
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T'were my math that was the problem.
900,000 ozt divided by 12 ozt/troy lb divided by 2200 = 35 tonnes

Must have had 2 or 3 bowls of dumb-ass for breakfast to screw up simple math so bad.
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"Last year we bought about 100 tonnes. This year it will be less but still a considerable figure," Shvetsov told Reuters at the time.

The Russian central bank has again increased its gold reserves by another 900,000 ounces worth $1.17 billion in April.
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900,000 ozt divided by 2200 ozt/mt = 409 tonnes.
Since when is 409 tonnes < 100 tonnes?
No doubt 409 tonnes is still a considerable figure compared to 100 tonnes.

Is something wrong with my math or did something get lost in translation?

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1 oz troy = 31.1035 grams
32.15 ozt =1 kilogram
1 tonne = 32150 ozt
If my calculator is correct 900.000ozt = +-28 tonnes
Latest comment posted for this article
I realise that is an enormous amount of gold I bought a week ago and I know its mind boggling for the average Joe to contemplate the size of that delivery lot, let alone the amount of dollars involved, so please try not to be envious of my years of hard  Read more
S W. - 5/29/2014 at 8:38 AM GMT
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