Russia increases gold purchases by 123%

Moscow (Jan 30)  The Central Bank of Russia bought a record amount of gold in the first 11 months of 2014 spending an estimated $6.1 billion. Increasing gold reserves attempts to reduce dependence on the dollar amid geopolitical tension, Mark O’Byrne of GoldCore, told RT.

Russia’s gold purchases accounted for a third of the world’s total of 461 tons, according to research by Thomson Reuters GFMS (Gold Fields Mineral Services). The amount of gold bought went up 123 percent from the previous year to 152 tons, worth $6.1 billion at current prices. It’s the most Russia has spent since the collapse of the Soviet Union.

Given the tension between the US and Russia, it’s more likely Russia will sell dollar assets and buy gold, said O’Byrne.

“That will be done both to protect the ruble and potentially to position the ruble as a reserve currency in the long-term, but also as a signal to Washington,” he said, adding that it’s almost like a geopolitical move showing that Russia has a monetary and financial alternative and it can retaliate if economic sanctions were to deepen.

On Thursday EU foreign ministers decided to prolong sanctions against Russian officials and the militias in eastern Ukraine until September 2015, but decided against broadening the list of economic restrictions. A final decision is expected in February.