Dave Kranzler says there’s more to the Russian gold story than what can be seen on the surface, especially since 2014. Here’s what has been going on…
“Countries stockpile gold for strategic and defensive reasons — for instance, in case relations between nations are damaged and their currencies lose their value,” Gabriel Rubinstein, a financial consultant and former representative of the Argentine Central Bank (source link is below)
Russia has been accumulating a significant gold reserve for over a decade, along with China and most if not all of the BRIC/SCO/Silk Road countries. This is a fact that has been either unnoticed or intentionally ignored by the western mainstream media. Of course, gold is a barbarous relic that just “sits there and does nothing” (Warren Buffet).
The graphic above, courtesy of goldchartsrus.com, shows the monthly gold holdings of the Russian Central Bank. One has to wonder why Russia is willing to make this information public, unlike China or the United States. Having said that, I suspect that – like China – the public information does not show Russia’s true gold holdings, which I would bet is significantly greater. Conversely, it’s commonly accepted by those of us who have studied this issue for many years that the actual amount of physical gold held by the Federal Reserve on behalf of the U.S. is substantially less than the official number.
GATA posted an interesting article from Sputnik which asserts that part of the motivation for Russia making gold a significant part of this currency reserves is to protect itself from currency and financial system attacks from the U.S.
Gold, this eternal financial resource, has a real value if compared to other financial assets. The Russian government believes that it’s better to have more gold resources than dollars. Hypothetically speaking, if Russia holds tons of US dollars and the US wanted to damage its economy, this would be possible through currency manipulations,” Rubinstein said, adding that gold guarantees against such a scenario (from the Sputnik article linked in the previous paragraph).
Russia has increased the value of its gold reserves by a factor of 10x over the last decade. It has also reduced its euro holdings from 40% of its Central Bank reserves to 26%. Russia has also been aggressively unloading its Treasury holdings.
You’ll note that there’s an inflection point in the graph above (my edit) which shows that the rate of accumulation of gold increased in 2014. As the Sputnik article points out, this point of inflection coincided with the sanctions imposed by the U.S. and the EU on Russia in 2014. Senator McCain is currently imploring Trump to ramp up those sanctions.
It’s been my view that the U.S. tried to attack Russia’s currency in 2014 – in conjunction with the sanctions – in order to affect the the value to Russia of its energy exports, as Russia is the world’s largest oil exporter:
The graph above shows the RUS/$ currency pair (from xe.com). Gold and silver investors are familiar with the waterfall formation that occurred in early 2014. That plunge in the ruble vs the dollar has the unmistakable footprints of a currency attack and the U.S. is the only country with motive.
This would explain one of the primary reasons that Russia accelerated the conversion of its dollar and euro reserves in yen. I would argue that one of the other primary reasons is that, along with China, the gold accumulation activity precedes an eventual re-introduction of gold into the global monetary system. My fear is that the U.S. is willing to start a global military conflict before it would be willing to let a reserve currency reset occur.