Enormous Gold ETF Purchases and Russian Gold Reserves

Two new articles published yesterday and today on Sharpspixley.com look at the underestimating of Russia’s latest increase in its gold reserves which come out at 700,000 ounces (almost 22 tonnes) added in January – a month when the Russian central bank has increased its reserves minimally in the previous two years, and what that means in terms of continuing central bank gold buying:

See: Russia’s January gold reserve increase much higher than previously reported

The second article comments on the almost totally-ignored-by-the-media enormous gold purchases into the USA’s biggest gold ETFs – GLD and IAU – on Friday which totalled over 23 tonnes in a single day.

See: Enormous purchases into US gold ETFs go virtually unnoticed

Russia buying more gold than China. 21.8 tonnes in Dec.

The Russian central bank added 21.8 tonnes of gold to its reserves in December.  It is thus adding gold to reserves even faster than China, while the two nations between them account for around 90% of all reported central bank gold reserve increases.  To read more on this click here to access my latest article on sharpspixley.com 

Scary 2016 ahead, Russia adds gold, SGE withdrawals etc. – and Season’s Greetings

Firstly my compliments of the season to all reader’s of lawrieongold.com, which I have now been publishing for almost exactly one year – and which has achieved just short of 100,000 page views over the period.  Thanks for following.

Here are some pointers to articles I have published on Sharpspixley.com – one of the best aggregators of precious metals news and comment available – in the past few days:

Scary year ahead. Should we be buying gold and silver:  Portents for 2016, according to a number of well-respected observers – are beginning to look decidedly scary. Will this turn the investment sector back into buying gold and silver?

Russia adds another 21.8 t gold and 46t more drawn out of China’s SGEThe Russian central bank has been continuing its gold buying spree increasing its holdings by around 22 tonnes, while China’s SGE sees physical gold continuing to be withdrawn at a strong level

And one you may not have seen, published on Seekingalpha.com pointing to the potential of an investment in the GDXJ if gold and silver do make something of a recovery in 2016: GDXJ- Limited Downside And Great Upside Potential In A Rising Gold And Silver Price Scenario


Dearth of gold articles!

Apologies for the apparent dearth of gold and precious metals articles from me published here this week.  Its not that I haven’t been writing – I have – but most of my work in the past week has been going direct to Mineweb – my main source of income –  so you can still read my thoughts and comments on what’s happening in gold and silver – and sometimes in other metals too – (notably platinum in the past week) so you can always read them there.

Here follow links to some of my recent Mineweb articles.  I’d hate to deprive you of my thoughts however obscure they may be!  Apologies if you have already read all or any of them

China gold demand up 17% ytd

Russia cools gold reserve additions in January

Platinum price puzzles

Can platinum regain its premium over gold in Q2-Q3?

Have the big banks been manipulating gold and silver prices?
 African mineral development risk: The best and worst nations

And my latest – published today:

HK January gold exports to China confirm strong demand

Russian Central Bank continues to build its gold reserves

Russia’s Central Bank has reported it has further expanded its national gold holdings in December, contrary to speculation that it may have had to sell gold to protect the ruble.  to read this and other key mining and metals articles on Mineweb.com click here

Lawrie Williams

It had been suggested last month that Russia would have to sell some of its gold reserves – the World’s fifth largest national central bank holding (ignoring the IMF’s holding) – to help prop up the ruble.  The Russian currency has been being driven down, almost in freefall for a time, by the unholy alliance of drastically falling oil and gas prices coupled with U.S. and European sanctions over the Crimea annexation and possible Russian involvement in the continuing uprising by pro-Russian rebels in Eastern Ukraine.

But, the opposite has been the case.  The Russian Central bank announced yesterday that its gold reserves grew by a further 600,000 ounces (18.7 tonnes) in December – the ninth successive month of gold reserve increases.  Clearly President Putin is a believer in the ultimate economic benefits of a strong national gold holding – particularly if some kind of global reserve currency realignment lies ahead in the relatively near future.

As a Reuters report points out, Russia has now more than tripled its gold reserves in the past 10 years, even as it recently has presumably had to use some of its its international currency reserves to defend the ruble with the national economy having been driven to the brink of recession. The ruble slid almost 50 percent in the past 12 months which makes the nation’s gold reserves ever more important to its global economic status.

Table 1.  World Central Bank Gold Reserves as reported to IMF

Rank Country/Organization Gold holdings
1  USA 8,133.5
2  Germany 3,384.2
3  IMF 2,814.0
4  Italy 2,451.8
5  France 2,435.4
6  Russia 1,206.8
7  China* 1,054.1
8   Switzerland 1,040.0
9  Japan 765.2
10  Netherlands 612.5

Source: World Gold Council, Mineweb

*China is widely believed to hold substantially higher gold reserves than those reported to the IMF as shown above.

Russia does not need to go out into the open market to buy this amount of gold.  It was the world’s third largest gold miner in 2013, the most recent full year for which figures are currently available.  The nation’s mines thus currently produce perhaps a little more than the 18.7 tonnes which have been moved into reserves, so that suggests that the country, like China, is not exporting its gold production, but accumulating it.

Table 2. Top 10 World Gold Producing Countries


Rank Country 2013 output (tonnes)
1 China 439
2 Australia 265
3 Russian Fed 249
4 USA 231
5 South Africa 182
6 Peru 179
7 Canada 125
8 Mexico 104
9 Ghana 102
10 Indonesia 96
Global 3009

Source: Metals Focus, Mineweb

2014 figures are not likely to have changed significantly from those shown in the table above.  Russia is estimated to have raised gold output during 2014 – first quarter figures were particularly strong – perhaps sufficiently to challenge Australia for the No. 2 slot, although Australian production may also have risen by enough to hold off the challenge.


Russia bought yet more gold in November

Latest figures from Russia’s central bank show that it purchased a further $720 million dollars worth of gold in November – which equates to around 18 tonnes at the prices prevailing that month.

As we noted in a previous article here – Is Russia really on the ropes: Could it sell its gold? – there has been speculation that Russia could liquidate some of its gold reserves – currently sitting at a little under 1,200 tonnes, worth approximately $45 billion at the current gold price.  However this is probably unlikely given President Putin’s strong positive feelings about the place of gold in any future currency realignment.  Indeed such a realignment may, perhaps through the ‘law’ of uninteneded consequences, be being brought ever nearer through what looks like a concerted effort by the West to destabilise Russia’s economy as punishment for its actions in Crimea and south eastern Ukraine.  What this has done is force Russia to set up bilateral trade deals with more friendly nations, notably China and former Soviet union satellites, bypassing the dollar, and also setting up its own version of the SWIFT international payments system in case the U.S. tries to freeze it out from using it.  Anything which reduces the use of the dollar in global trade will likely bring the day when a new reserve currency (or perhaps group of currencies) will come about.

Koos Jansen, now writing for http://www.bullionstar.com, has been great in picking up material from non English language statements by key figures which somehow seem to be completely missed by most mainstream Western media.  In his latest post on the bullionstar site he publishes an exchange of questions and answers between President Putin at his annual press conference only yesterday, and Russian journalist Vyacheslav Terekhov of Interfax, at which the Russian President stated categorically that the Russian Central Bank “should not hand out our gold and foreign currency reserves or burn them on the market, but provide lending resources”  For the full article click here.

Again as we pointed out in yesterday’s article on the Russian economic situation, 50 years of sanctions against Cuba have still not brought that country to its knees.  Yes its people may lack the wealth and ‘stuff’ that most Western countries’ citizens take for granted, but they are still happy to support their leader’s policies when they have the continuing perception that it is the wicked USA which causes the problems.  This has served to unite the people behind the government rather than rise up against it.  So it is with Russia, which has an enormously more self-contained economic system than Cuba had when U.S. sanctions were first imposed, and it also has a people who have lived through many years of economic deprivation before and come through them, perhaps not happily, but stoically.  Support for President Putin and his strong-man policies seems to be overwhelming as long as the American bete noire is out there to be blamed for any deprivations suffered.