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People’s Bank of China headquarters in Beijing. (Image Wikimedia Commons)
China and Russia added more gold to its reserves in November, leading the latest global central banks buying spree that saw them adding 55 tonnes of the yellow metal to their coffers, up almost 90% from the prior month.
According to the latest World Gold Council’s gold reserve data, released Wednesday, China and Russia were once again the biggest buyers, with 21 tonnes and 22 tonnes added to their respective reserves.
The People’s Bank of China (PBoC) released data last week that showed 19 tonnes were added in December as well. But based on official figures, released last June for the first time since April 2009 and updated monthly ever since, the amount of gold held by the PBOC still only accounts for around 1.7% of its total reserves.
The increased purchases by the world’s sixth largest official sector gold holder could lend support to international prices of the precious metal, say analysts.
Despite a jump in prices at the start of the year, gold is still trading close to historic lows. February gold was last up $3.00 at $1,088.50 an ounce, well down from last week’s two-month high of $1,113.10 an ounce, basis February Comex futures.
Bullion prices dropped 10% last year, a third straight annual loss, on fears that higher U.S. rates would dent demand for the non-interest-paying metal. Several analysts have predicted further price declines this year.
8 Comments
Altaf
I can understand China. They want to diversify their reserves kitty away from dollars and can add as much gold as the can. They have 3.3 trillions do play with.
But Russia? I dont understand. With oil prices in 30s, with export income dropping more than 50% YOY, with reserves depleted from 180B to 130B in 6 months, with balance reserves enough to support their food for only one year, with rouble falling, with sanctions in place, with a begging bowl in hand, how they manage to find money to buy gold. Its a mistery. Can any one connect all dots please?
George Evans
the situation in Russia is no different to that in Saudi Arabia and ALL oil producing economies…
the oil shock..and with some marginal impact of sanctions imposed by the USA…has stimulated the Russians to diversify their economy with a fair degree of success so far…
the Chinese , Russians and most interested observers believe that gold is undervalued because of the shenanigans in the casino in the US..and are prepared to wait until the inevitable turn…
it is not so much a huge increase in the gold price…more the collapse in the US$ which is predicted…interestingly the Loonie has gone from being above par to being currently $0.59…surely a joke…it exposes the inherent stupidity of the present US$ based economic system….
but you seem to think it is the Russians who have a problem ???..
Stephen
22mt of bullion doesn’t cost too much.
Bruce Wayne
Why is the US share of 33% so dark in the graph?? Maybe this article was produced by the fine folks at Kremlin Central, perhaps?
Bob Prociuk
What’s not know is what the Russian Central Bank paid for the gold. Remember that Russian does not (officially) permit the export of domestically produced gold. With producers forced to sell internally, the banks may be able to set an arbitrary price well below market price.
Martin351
The figures are funny because of all that gold the U.S supposedly hoards, 90% of it is gold plated tungsten which in essence is worthless.
Ralph
Russia and China are buying significant quantities of physical gold. From who? Where is all this physical gold kept so that Russia and China can buy it? Why would who-ever holds the gold sell it so relatively cheap if its expected to be used to back the BRIC?
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