Gold bars in a vault in West Point, N.Y. (Associated Press)
Or are they?
The IMF’s latest international gold reserves data, updated yesterday,
shows that in July, Russia raised its official gold reserves to 5.5 million
ounces (1,104 tonnes).
This confirms data released last week by the Central bank of the Russian
Federation, which reported an increase of over 300,000 ounces from June’s
5.197 million ounces figure. IMF data is reported with a one month lag.
The latest IMF data also shows that in July, the National Bank of
Kazakhstan added 45,000 ounces to its official gold reserves, taking its
total holding to 5.1 million ounces.
According to the World Gold Council, over the last six months, Russia has
now increased its gold reserves by 54 tonnes. In the same period Kazakhstan
has purchased 12 tonnes.
Russia now has the world’s 6th largest gold reserves, officially higher
than both Switzerland’s 1,040 tonnes and China’s 1054.1 tonnes. As a
comparison, in the second quarter of 2009, Russia only had 550 tonnes of gold
in its official reserves meaning that their reserves have nearly doubled in
just over 5 years.
The ongoing accumulation of official gold by Russia appears to be part of
a reserve diversification strategy. Gold is held by central banks as one of
their reserve assets alongside foreign exchange assets including US Dollars
and Euros, and also IMF Special Drawing Rights (SDRs).
Some Russian analysts point to the threat of continued western sanctions
on Russia as a renewed catalyst for the Russian central bank diversifying out
of dollars and euros by increasing its gold reserves. Gold now accounts for
over 12% of Russian official reserves and could reach 15% by year end if the
current trend continues.
As well as Kazakhstan, other countries in the region have also actively
been increasing official gold reserves this year including Azerbaijan,
Kyrgyzstan and Tajikistan.
Today in the Belarusian capital of Minsk, Russian President Vladimir Putin
met for trade talks with his counterparts Nursultan Nazarbayev of Kazakhstan,
Alexander Lukashenko of Belarus and also President Petro Poroshenko of the
Ukraine.
If Putin meets separately with the Ukraine’s Poroshenko today, this will
be the first time that the two presidents will have held discussions, which
is especially significant given the ongoing Ukrainian conflict.
Russia is a member of the Eurasian Customs Union along with Kazakhstan and
Belarus. The Eurasian Customs Union is a precursor to a Eurasian Economic
Union which the three countries hope to establish by 2015 which will be
modelled on the European Union.
Russia, Kazakhstan and Belarus are also members of the Eurasian Economic
Community along with Kyrgyzstan, Uzbekistan and Tajikistan, and all six
countries are members of the Shanghai Cooperation Organisation (SCO)
alongside China.
Chinese President Xi Jinping raises a shot with Russian President
Vladimir Putin
Given close economic cooperation between Russia, Kazakhstan and Belarus,
and a trajectory towards economic union, it is probable that the three
countries would be coordinating monetary policy which would include a common
approach to official gold reserves accumulation.
This will be worth watching in the coming months and years, and like
China, it is possible that Russia and its allies may not be fully reporting
their gold reserves accumulation data to the IMF since it is not obligatory
that they do so.
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MARKET UPDATE
Today’s AM fix was USD 1,286.50, EUR 974.77 and GBP 775.79 per ounce.
Yesterday’s AM fix was USD 1,281.00, EUR 965.12 and GBP 772.29 per ounce.
Gold fell $4.20 or 0.3% to $1,276.20 and silver fell $0.11 or 0.5% to
$19.37 per ounce yesterday.
Gold is marginally lower in trade in London after gold in Singapore surged
over 1% from $1,276/oz to over $1,290/oz.
Silver in U.S. Dollars - 2 Year (Thomson Reuters)
Silver for immediate delivery rose 0.9% to $19.64 an ounce. Spot platinum
rose 0.5% to $1,427 an ounce. Palladium was unchanged at $888 an ounce -
remaining near record 13 year nominal highs.
Gold has moved up on higher volumes, which is a bullish indicator. Futures
trading volume were 34% above the average for the past 100 days for this time
of day, data compiled by Bloomberg show.
Disputed Gold Artefacts To Remain In Netherlands
'Cold War' Over Crimean Gold
The Crimea and Ukraine are fighting for control of priceless gold
artefacts.
Ukraine claims ownership of the Scythian gold which is currently exhibited
in Amsterdam in the Netherlands and is preparing a lawsuit against its former
republic of Crimea.
The Allard Pierson Museum in Amsterdam decided to keep the disputed
collection of Crimean Gold items until the ownership dispute is resolved
either amicably or in court.
“We agreed that the exhibition would be held in the Netherlands until the
circumstances are clarified,” the museum spokesperson said.
Russian Culture Ministry aide Kirill Rybak claimed the Dutch museum’s
unwillingness to return the collection of rare gold artifacts to Crimea was
unjustified.
The exhibition “The Crimea: Gold and Secrets of the Black Sea” opened in
Germany in mid-2013 and moved to the Netherlands in early February. In March,
Kiev demanded the gold be returned to Ukraine, not Crimea, since the latter
had voted for independence and later joined Russia. Crimea, however, dismissed
the demands as groundless.
As Al
Jazeera reports:
"A golden helmet with the silhouettes of soldiers engraved. Ancient
jewels, coins and caskets that are hundreds of years old sit at the
University of Amsterdam's archaeological Allard Pierson Museum. They had been
discovered in Crimea and show the richness of the peninsula in the Black Sea.
The exhibition opened in February, when Crimea belonged to Ukraine. In the
meantime, however, Russia has sent troops to the peninsula, a referendum was
held, and Crimea has seceded from Ukraine and joined Russia.
As both Moscow and Kiev claim the ownership of the items, the Amsterdam
museum finds itself caught in a diplomatic dispute. The "cold
conflict" over Crimean gold is in of itself a proxy fight amid the
ongoing crisis between Russia and the West.
In a few days the exhibition ends, but the Dutch curators have said they
are unsure where to return the gold.
They cannot simply return it to Crimea, explained Yasha Lange, head of
communications at the University of Amsterdam. The items are on loan from
five museums, four of them located in Crimea. Ukraine considers the items
state property. "According to Ukraine, giving them to Crimea would mean
they suddenly end up in Russian hands," Lange told Al Jazeera."
Economic Eye For An Eye Will Leave Us All Blind
Economic war with Russia appears to be deepening as seen in McDonald's restaurants
in Russia being shut down.
The European Union and the United States have imposed a series of economic
sanctions, including against several Russian businesses and individuals. Last
month, the European Union also instituted punitive measures against Russia’s
largest bank, Sberbank, and four other Russian financial institutions.
Russia responded by banning imports of food and agricultural products from
the United States and Europe.
Moscow and the U.S. and EU are engaged in dangerous tit-for-tat sanctions
ostensibly over the conflict in Ukraine. An economic eye for an economic eye
will leave us all economically blind and impoverished.
Trade and economic wars throughout history have led to outright military
confrontations and war. This was clearly seen in 1914 and in the years prior
to the outbreak of World War II.
Beginning in 1938 the U.S. adopted a succession of increasingly
restrictive trade restrictions and economic sanctions on Japan and then an
oil embargo and the seizure of Japanese assets and companies in 1941.
Economic sanctions have been shown to be ineffective in achieving goals -
whether that be regime change, weakening competitor nations economies or an
attempt to deter other countries militarily.
Those who fail to learn their history are destined to repeat it.
