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Russian Gold: 'Let's Offer An Alternative To U.S. Dollar' - Moscow Exchange Chief

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Russian Gold: ‘Let’s Offer An Alternative To U.S. Dollar’ — Moscow Exchange Chief

(Kitco News) - Russia should offer gold to its pro-U.S. dollar investors — a safe-haven option that will be produced in Russia, said CEO of the Russian trading floor Moscow Exchange (MOEX).

“We know that there are a number of super conservative investors who bought the U.S. dollar and kept the money under the pillow, thinking that it is the safest option out there,” CEO of Russia’s largest exchange group Alexander Afanasiev said when speaking to the Lower House of Russia’s Parliament last week.

Now, it is time to offer an alternative to people who are looking for safety when investing.

“Let’s offer an alternative to the U.S. dollar in the form of Russian gold, which will be produced here … investment gold,” he said.

During his speech, the MOEX chief also said that there has been an increase in Russian investors over the past year and a half and that they are all acting “surprisingly rational.”

Gold plays an important role for Russia, especially when it comes to the central bank’s recent surge in bullion purchases.

Since 2015, Russia’s central bank has been the number one gold buyer out of all other countries, acquiring 828 tonnes over the last four years, which brought the reserve total to 2,036 tonnes of gold, according to the latest report by TD Securities

Growing interest from central banks could mean higher gold prices this and next year, said the Canadian bank, citing evidence of banks stepping up their bullion purchases.

“Central bank gold holdings have grown by a dramatic 13 percent (roughly 3,900 tonnes) since the lows recorded back in 2009 and are expected to grow by another 800 tonnes over the next two years,” TD Securities head of global strategy Bart Melek wrote in a report published just over a week ago. “In addition to continued purchases by Russia, Turkey, Kazakhstan, and India, now includes China— the yellow metal could well move above our positive projections,”

The bank described gold as nobody's liability and listed several reasons why central banks from around the world are interested in increasing their official gold reserves, including a move away from the U.S. dollar.

“The desire to diversify central bank FX portfolios from the USD, which still represents over 60 percent of global FX reserves, is one of the key reasons to buy gold,” Melek wrote. “The U.S. [will] likely [be] sharing its superpower status with China (possibly India over the long term), [and] gold’s reliability, time-tested ability to preserve wealth and almost universal acceptance makes it a good reserve asset.”

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