A record amount of gold was exported and sold from Russia in 2020, more than 220 tons. What is the reason for this?
Throughout 2020, a pandemic is raging on our planet, which has given rise to the global economic crisis.
During periods of global economic crises, countries and businesses always buy gold. This is an axiom.
Moreover, it is necessary to actively buy gold in the 2020 crisis, with which only the Great Depression of the early 30s can be compared in severity. Since the world's major currencies, especially the dollar, can depreciate sharply. In the United States, a record $ 4 trillion was printed in 2020, which increased the US debt from $ 22 trillion. up to 26.5 trillion. dollars.
This is exactly what the leading countries of the world are doing, especially Switzerland and Great Britain are buying up a lot of gold, which have multiplied purchases since the beginning of April.
Russia in 2020 is doing exactly the opposite, selling gold in unprecedented, record quantities. Moreover, sales have increased sharply since the first days of April.
And selling gold during crises, how to move from dollar to rubles during a crisis.
Here are the numbers:
For 9 months of 2020, Russia sold 220 tons of gold, of which 98% was exported to London, and for the entire 2018 a little more than 10 tons were exported and sold, in 2019 - 120 tons.
220 tons is 10% of all reserves of monetary gold in the gold and foreign exchange reserves of Russia, which at the beginning of 2020 amounted to 2.270.56 tons (5th place in gold reserves in the world).
That is, Russia could easily increase its gold reserves by 200 tons, but did not do it.
The Central Bank of the Russian Federation, which for the past several years has been the largest buyer of gold in the world, for example, in 2018 it purchased 270 tons, has suspended purchases since April. And the head of the Russian government, Mikhail Mishustin, signed a decree on the issuance of general licenses for the export of gold and silver in the form of ingots.
From April to September inclusive, Russia received 12.5 billion US dollars from the sale of 220.5 tons of gold. In the third quarter, the Central Bank of the Russian Federation joined the sales, selling for the first time since 2007 1.2 tons of gold and foreign exchange reserves. In the second quarter of 2020, gold revenues exceeded gas revenues for the first time in history.
According to experts, the main ideological inspirer of record gold exports abroad in 2020 is Finance Minister Anton Siluanov, who is assisted in this by the head of the Central Bank Elvira Nabiullina.
What is the reason for the change in the policy of the Central Bank of Russia?
Due to the pandemic, there was a sharp drop in world prices for oil and gas, for the first time in history, prices for them went into negative territory for several days, plus the costs of combating the pandemic. As a result, the budget deficit amounted to more than 4 trillion rubles. And ahead is the 2nd wave of the pandemic and the intensification of the global economic crisis. In addition, the price of gold on the world market began to rise sharply, for the first time in history, exceeding the price of $ 2,000 per troy ounce (31.1 grams). They are now around $ 1,840. And at the beginning of 2020, the price of gold was less than $ 1,600.
The sharp increase in gold sales in 2019, compared to previous years, to 120 tons from 10-15 tons, is also associated with the rise in gold prices on the world market and low oil and gas prices.
More than 350 tons of gold was mined in Russia in 2019, in 2020 the record of the previous year will be exceeded, so the sale of 220 tons is not critical. If only it did not become a habit.
The Central Bank of the Russian Federation believes that gold should account for approximately 20% of the gold reserves (currently 21%), since gold is a relatively illiquid investment that is sensitive to market prices. But on the other hand, physical gold bullion is stored on the territory of Russia, which is more reliable, and dollars and euros are placed mainly in Western banks and they may be affected by US and EU sanctions against Russia, they may be seized.
Therefore, it is wiser to bring the amount of gold to 50% of the gold and foreign exchange reserves, and in 2020 it was necessary to use dollar reserves in connection with the possible devaluation of the American currency against the euro and other world currencies.
PS. There is another version why the Central Bank of the Russian Federation suddenly refused to buy Russian gold. The Central Bank of the Russian Federation, as a branch of the US Federal Reserve, received an order from the owners of world money. Therefore, instead of buying gold, Russia began to actively sell the "yellow metal". As a result, although gold has risen in price on the world market, it is not as critical as it could. In particular, the well-known economist, MGIMO professor Valentin Katasonov asserts this.
I believe both versions are correct.
Last edited by Kiko on Mon Dec 14, 2020 11:25 pm; edited 1 time in total (Reason for editing : Additional link.)