With tensions between the US and Russia escalating over the past several years, the latter country has been been on a path of gradually reducing its exposure to US assets. As a result, Russia’s share of gold in its $583 billion worth of international reserves has finally outpaced its dollar assets for the first time on record.
According to a recent report published by the Central Bank of Russia and later reported by Bloomberg, gold accounted for 23% of the bank’s stockpile by the end of June 2020, meanwhile the share of US dollar assets declined to 22% — a significant drop from the 40% reported back in 2018. The ‘de-dollarization’ shift is part of President Vladimir Putin’s larger strategy to to reduce the Russian economy’s dependence on US assets, especially amid increasing US sanctions and disintegrating relations with Washington.
Aside from the Euro, gold now accounts for the second-largest asset in the central bank’s reserves. The rise in the country’s gold reserves was largely the result of a 26% price surge between June 2019 and 2020, prompting the Central Bank of Russia to purchase approximately $4.3 billion in gold. Russia has become one of the largest buyers of gold in the world, spending more than $40 billion on the precious metal over the past five years.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.