The Central Bank of Russia (CBR) is increasing the country’s gold reserves to meet a goal set by President Vladimir Putin to make Russia less vulnerable to geopolitical risks.
As of November, Russia had 1,801 tons of gold accounting for 17.3 percent of all reserves. Russia is the sixth largest gold owner after the United States, Germany, Italy, France, and China.
“Under the instruction by President Putin, the Bank of Russia has been implementing the program of increasing the absolute share of gold in the gold and currency reserves of Russia for many years," First Deputy Chairman of the Russian regulator Sergey Shvetsov said last week at a conference on precious metals in Moscow.
Since Putin’s election as president, Russian gold reserves have increased more than 500 percent from 343 tons, according to Gold.org data.
Buying gold makes a country less vulnerable to geopolitics. After the Crimea referendum in the first quarter of 2014, Russia increased its gold reserves by almost 75 percent.
"I will not dwell on the geopolitical situation. Every smart person understands the value of gold in ensuring financial and economic security of the country," Shvetsov said at the conference.
As Goldcore reports, the CBR has more than doubled the pace of gold purchases. In the second quarter of the year, Russia accounted for 38 percent of all gold purchased by central banks.
“Gold is an asset that is independent of any government, and in effect given what is usually held in reserves, any Western government,” said Matthew Turner, metals analyst at Macquarie Group in London, as quoted by Bloomberg. “This might appeal given Russia has faced financial sanctions.”