Russia's Central Bank Eyes More Gold
Source: Commodity Online (12/7/09)
"Russia's Central Bank picked up the pace of gold purchases in November"
Russia's gold reserve probably rose by $790 million to $23.1 billion in the week ended November 27. The Central Bank increased gold holdings by almost 130 tons in the last year. The bank'[s holdings equaled $23 billion on December 1, a gain of 13% in the month.
Russia plans to increase gold holdings and diversify the structure of its reserves, seeking alternatives to a weakening dollar.
That development worries some people: Because central banks typically buy U.S. dollars to store their foreign exchange reserves, the growing taste for gold can be seen as the latest sign that the greenback's status as the world's sole reserve currency is in jeopardy.
On November 23, Russia's central bank announced that it had bought 15.6 tons of gold in October to add to its monetary assets. But unlike its Indian counterpart, Russia's central bank bought gold produced by the country's own gold mines. The additional gold was only 2.7% of the 568.4 tons it owned in September, which represented 4.3% of its total reserves.
It doesn't surprise economists and investment pros that there should be a growing desire by global central banks to diversify away from the greenback. Lower demand for dollars makes sense to central bankers in countries such as Japan, which is no longer trying to control its exchange rate vís-a-vís the dollar and is no longer so inclined to buy greenbacks to support the dollar's value, says Barry Bosworth, a senior fellow at the Brookings Institution in Washington.