Already the largest oil producer in the world, Russia has also become the largest buyer of gold bullion on the planet, reports Bloomberg.
Russian President Vladimir Putin has stated that the U.S. is putting the global economy at great risk by abusing the dollar and its existing power as the world’s dominant currency. Under his leadership, Russia’s central bank has bought 570 metric tons of gold bullion in the last decade – almost triple the weight of the Statue of Liberty – according to Bloomberg.
China’s central bank is the second-largest buyer of gold over the last 10 years, but well behind Bank Rossii, Russia’s central bank.
By telephone from Moscow, Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, tells Bloomberg the following:
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,”
Putin first instructed central bankers to begin buying gold in November 2005, while on a tour of Russia’s Magadan region. Both Polyus Gold International Ltd and Polymetal International Plc have operations in that far eastern region of Russia. Since that time, the price of gold bullion has increased by almost 400 percent.
As central banks in developed economies have printed money in an attempt to fend off the global financial crisis, investors around the world have flocked to the precious metal as a haven for safety.
According to a Kremlin transcript, Putin told Bank Rossii:
“After all, they’re called gold and currency reserves for a reason,”
Gold bullion was then priced at $495 an ounce, representing an 18-year high in the precious metal. Gold has continued its annual year over year climb in price since Russia’s central bank began spending much of its oil resources on shoring up its gold reserves.
Analysts expect gold bullion to advance again in 2013, to $1,825 by the end of the year, according to the median of 26 forecasts in a Bloomberg survey.
Despite Russia’s heavy buying activity, it still trails much of the developed nations in actual tonnage owned, according to the World Gold Council. The U.S. holds the most gold with around 8,134 tons. Germany is second with 3,391 tons, while the International Monetary Fund (IMF) holds 2,814. Following the IMF, which is based in Washington, DC, are Italy, France, China and Switzerland.
Over the last ten years, Switzerland has sold the most gold, followed by France, Spain, the Netherlands and Portugal.
Russia’s current gold reserves total 958 tons.