Don't Ignore Gold Yet; Russia Isn't
(Kitco News) - While some have been shying away from the gold market, with prices seeing their biggest daily decline in two months Friday, one country is paying close attention to the precious metal -- Russia.
According to Shae Russell, lead editor of Markets & Money, the country’s path to increasing its gold reserves is something that shouldn’t be ignored.
“Even though the precious metal isn’t at the center of the financial system today, gold still equals power,” she wrote in a post Monday.
“Since July 2014, Russia’s central bank has increased gold stores by 75%,” she added.
Looking at the latest World Gold Council data, released in February, Russia currently holds 1,839.8 gold tonnes, making up 17.7% of its total reserves. The government’s “buying spree,” as Russell pointed out, has made the country the seventh-largest gold holder.
However, there is more to the Russia story, Russell noted.
Why is Russia doing this?
“Increasing the gold holding was a way to diversify their foreign assets away from currencies, enabling Russia to get away from the oppressive U.S. dollar and euro,” Russell explained.
But that is not the only action the Russian government is taking.
As Russell explained, Russia is exploring cryptocurrencies in an attempt not only to move away from the U.S. dollar but also to protect itself against sanctions and attract more foreign capital into the country.
“Russia plans to be the first country to embrace a national cryptocurrency. Less than two weeks ago, a bill was submitted to Russian parliament proposing a ‘cryptoruble,’ a legal cryptocurrency that would work in tandem with the fiat ruble,” she wrote.