Gold reserves increased in Russia To a new record high, despite the sanctions, after the Central Bank of Russia bought more precious metals as the price of the yellow metal rose.

The Russian newspaper “Vzglyad” quoted writer Olga Samovalova that Russia's international reserves increased on January 1 to $598.6 billion from $592.4 billion on December 1, recording their highest level since March 2022.

Standard level

According to Central Bank data, Russia's gold reserves reached a new record level at the end of last year, as its value increased to $155.9 billion, and to 2,350 tons of the precious metal.

Russia did not buy gold on an ongoing basis to replenish its reserves, according to Nikolai Dudchenko, an analyst at Finam Financial Group, who added, “From 2000 to 2009, no growth was recorded in gold reserves. The reserves were at the level of 390 and 400 tons, and yet the value of the reserves increased in dollars.” By more than 200% during this period due to the increase in the price of gold in global commodity markets.”

Since 2008, Russia has begun to accumulate gold reserves significantly, and Dudchenko stated that the reserve has reached a high level since July 2022, but in terms of dollar value, the value of the reserves increased by more than 15% in the period extending between July 2022 and January 2024. .

For his part, investment strategist Alexander Bakhtin explained that since 2014, the share of gold in Russia’s reserves has doubled, reaching 26% by the end of 2023. In 2021, the percentage of gold reserves was kept at 18% of the total reserves.

With the outbreak of war between Russia andUkraine In February 2022, gold became one of the options for the regulator as a protective asset in conditions of foreign trade restrictions and geopolitical instability, according to Bakhtin.

Change the rule

At the end of 2022, the Russian Ministry of Finance changed the rule regarding the potential share of gold in reserves. According to the recommendations of the International Monetary Fund, gold in Russia’s reserves should not exceed 20%, but with the international institution losing its influence over the Russian financial authorities, Moscow raised the maximum limit. The share of gold in reserves reaches 40%.

“When accumulating gold reserves, the Bank of Russia does not proceed from the principle of obtaining excess revenues compared to foreign currency reserves,” Dudchenko said. “The gold reserve is a strategic reserve that can be used in the event of a force majeure situation. For this reason, there is a significant increase in demand for gold from global central banks.” .

Russia is not the only country that has realized the need for its gold reserves, according to the head of the analysis department at Zenit Bank, Vladimir Evstiev, who said that many countries, including China and India, have begun increasing the share of gold in their reserves since the first round of quantitative easing policies that Implemented by the US Federal Reserve and the European Central Bank.

“Gold has traditionally served as a substitute for money, so the unsecured issuance of reserve currencies has increased demand for precious metals,” he added. “Under the current geopolitical conditions, this strategy seems more appropriate. Gold will remain a valuable asset even in the event of a new global crisis or currency problems.” That is, one of the largest economies in the world.

Dudchenko added that how to integrate the national currency into the new emerging framework is among the important problems that will require a solution in the medium term. The emergence of the dollar-based Bretton Woods system in the 1940s was linked to the United States' huge gold reserves in the post-war years. Ultimately, the Bretton Woods agreement was cancelled, while the dollar remained central.

Continuation of approach

Experts believe that Russia will continue to accumulate gold reserves, especially since 40% of the precious metal and foreign currency reserves have not yet been exhausted. “Russia has more opportunities to replenish reserves,” Dudchenko said. For example, in 2024, information emerged about the discovery of new gold deposits that are The largest since 1991 is the Sovinoye mine located in Chukotka, with proven reserves of 100 tons, and it is possible to use part of them to replenish Russia’s reserves.”

For his part, Bakhtin expected that gold in 2024 will remain a hedging tool against currency and geopolitical risks, and it is likely to rise further supported by a reduction in interest rates by the Federal Reserve Bank, and geopolitical tensions may also help its price rise.