Russian Ruble

The New

Hard Currency? 

Russia’s 2019 Gold Rush Continues: Buys 600,000 Ounces of Gold In March

Russia buys 18.7 tonnes of gold bullion in March 2019 

– Russia’s official gold holdings are now 2,150.5 tonnes which as a percent of foreign exchange reserves in gold is 19.1% (see table) 

– Russia liquidated 85% of its US Treasury holdings in just two months in April and May 2018 

– Russia dumped over $90 billion of Treasuries in April and May as holdings collapsed from near $100 billion to just $9 billion 

– Russia sees gold’s role as independent currency and safe haven as is a “100% guarantee from legal and political risks” 

– Russia and China’s gold buying is set to continue and may accelerate

The Russian central bank, President Putin and senior politicians and policy makers have spoken about the importance of gold as a form of financial and monetary insurance. They believe gold provides valuable insurance against monetary and geopolitical risks. Manager of monetary policy at the central bank, Dmitry Tulin, recently said of gold: 

“The price of it swings, but on the other hand it is a “100% guarantee from legal and political risks”. 

Russia and China’s gold buying is set to continue and may even accelerate given the heightened financial and geopolitical risks and due to both increasingly powerful nations confidence in gold as a hedge and safe haven.

DYI:  If these reports are accurate Russia will be in the cat bird seat when the next global recession/depression occurs.  Not only acquiring large gold reserves despite their small economy placing in 5^th place among nations for gold holdings have reduced substantial private and governmental debt to levels close to being statistically insignificant.

 

If Russia continues on this path confidence in the Ruble will grow and become known as a hard currency to the point international investor’s interest in their stocks and corporate bonds.  DYI’s model portfolio does not include international stocks and bonds; however, when the world wide downturn does arrive dropping Russia stocks and bonds to a point of excellent value I’ll certainly point that out for the more adventurous investor.

DYI