Russia bought a record amount ofgold for its gold reserves in 2010. An increase by nearly one third to atotal of 784 tons has earned Russia the eight position in the world andmay propel it further to the top in terms of gold and currencyreserves.
Gold remains the only stable asset amidpost-crisis currency fluctuations. Russia plans to ramp up its share inworld gold reserves and has all the capacities to do so. Statistics saythat gold accounts for a bit more than 7 percent in Russia’s reserves,whereas in some countries it exceeds 50%. These countries have nointention of increasing their gold reserves and may even choose to sellthem.
Russia’s Central Bank plans to buy more thanone hundred tons of gold annually. Garegin Tosunyan, the President ofthe Association of Russian Banks, comments:
"Russiais diversifying its gold and currency reserves, which is a positivetrend. There was a time when they consisted 80% of dollars, then euro.But gold has been the most stable currency at all times. For thisreason, it would be preferable for Russia to accumulate its reserves ingold, particularly amid the highly volatile currency market. Dollar andeuro fluctuations raise questions too."
The world’stop economies, including the United States, Germany and France, retainedtheir gold reserves at a former level last year. These countries werenot in a rush to buy or sell gold despite the 2009 agreement thatestablished a 400-ton limit for gold sales. Signatories to the agreementsold a mere 6.5 tons of gold in 2010. This can be explained by theshare of gold in these countries’ gold and currency reserves. In the USthis share reaches 75 percent, so a further increase will lead to aclear imbalance.
The recent forecasts that gold nolonger guarantees protection and is a thing of the past fell through inthe wake of the 2008 crisis. Gold standards are back. Experts say thatthe risks of rebuilding global economy stay in place because ofsovereign debts in the euro zone which creates a favorable foundationfor maintaining gold prices at a high level or setting them higher.
In2010, the only country that bought more gold than Russia was SaudiArabia. Since both countries are major oil exporters with no substantialforeign debts, they might continue to “compete” in gold buying thisyear. In any case, Russia is set to stock up on gold as a stabilizingasset and a reliable “security cushion”.