Russia Buys Record Amount Of Gold For Reserves

Russia's now in eighth place for gold reserves, thanks to the central bank now holding 784 tonnes of gold. Purchases added a third to the country's gold reserve last year.

Russia’s Central Bank plans to buy more than one hundred tons of gold annually. Garegin Tosunyan, the President of the Association of Russian Banks, comments:

"Russia is diversifying its gold and currency reserves, which is a positive trend. There was a time when they consisted 80% of dollars, then euro. But gold has been the most stable currency at all times. For this reason, it would be preferable for Russia to accumulate its reserves in gold, particularly amid the highly volatile currency market. Dollar and euro fluctuations raise questions too."...

The recent forecasts that gold no longer guarantees protection and is a thing of the past fell through in the wake of the 2008 crisis. Gold standards are back. Experts say that the risks of rebuilding global economy stay in place because of sovereign debts in the euro zone which creates a favorable foundation for maintaining gold prices at a high level or setting them higher.

In 2010, the only country that bought more gold than Russia was Saudi Arabia. Since both countries are major oil exporters with no substantial foreign debts, they might continue to “compete” in gold buying this year. In any case, Russia is set to stock up on gold as a stabilizing asset and a reliable “security cushion”.

Since gold only accounts for 7% of Russia's reserves, while shares in some fully developed countries are 50% or more (the U.S. has 75% of its reserves in gold), there's still lots of room for expansion.