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Saturday, March 17, 2018

“Quiet Putin’s attack on the dollar: Russia is actively buying gold”

Russia continues to actively replenish their gold reserves. Only in January they increased by 20 tons and reached the level of 1 300 tons. Such bulk purchases precious metal, the German newspaper Die Welt calls a “quiet attack on the dollar.” According to the publication, thus Vladimir Putin is trying to break the supremacy of Europe and the USA. “Who buys gold, he reduces the dominance of Western currencies — such is his calculation,” writes Die Welt. What is the intensive purchase of gold by Russia, “MK” asked the experts.

photo: Gennady Cherkasov

According to Die Welt, our country is constantly increasing its gold reserves since the crisis of 2008. Was no exception and the current. So, for the last 12 months, Russia has purchased more than 200 tons of the precious metal. According to the version of the German newspaper, that’s the claim of the Russian President on global power in the world. Economic grounds for the acquisition of gold no. The fact that the weakening of the exchange rate at 1 ruble increases budget revenues by 35-40 billion. “So every dollar could bring the country benefits,” the newspaper writes.

However, Russia is on the contrary actively purchased gold. “Putin wants to abandon the dollar — whatever it takes”, — say the authors of the article in Die Welt. In addition, given the conflict of Russia with other countries, “Putin’s gold — insurance”. The value of this metal is recognized worldwide.

Alena AFANASYEVA, a senior analyst at GK FOREX CLUB:

“I think it is not in conspiracy theories and do not desire to crash the US dollar. The U.S. economy will cope with this task itself. The fact that gold is a traditional safe haven asset, which is in demand among investors in times of uncertain economic prospects or in the event of rising geopolitical tensions. Over an extended period of time the gold was kept at a fairly low by historical standards the levels that made him quite attractive to purchase the asset. And the threat of a slowdown in the global economy, due to the cooling of China and the likelihood of a recession in the U.S., creates conditions for the growth of gold demand in a given period of time. We’re already talking about the fact that by the end of the year GDP will go negative. In such circumstances, it is precious metals may become the “safe haven”, which will attract the attention of investors, and, therefore, will sharply rise in price”.

Artem DEEV, head of the analytical Department AMarkets:

“It is hardly necessary to look for some conspiracy reasons in the replenishment of gold reserves of Russia, because our authorities understand that precious metal can not be any alternative reserve currencies. So massive purchases rather due to a desire to diversify reserves. It is important to understand that, for example, not so long ago the government conducted a fairly major purchase U.S. government bonds. The predominance of gold in purchases is due to several reasons. First, in the context of aggravation of geopolitical tensions, it would be strange to increase purchases of reserve currencies or of defensive assets, such as U.S. government bonds. Secondly, fundamentally, gold has a good potential of growth. Accordingly, the increase in the share of gold in reserves is attributable to perfectly rational arguments, and this can hardly be considered an attempt to abandon the dollar”.

Georgy VASHCHENKO, head of operations on the Russian stock market IR “freedom Finance”:

“The growth in the share of gold in reserves helps to protect them from consequences of possible sanctions, to support the banks and and domestic suppliers (with purchasing on the domestic market), as well as to increase protective assets. Now the price of gold increases, and such a maneuver helps to maintain the level of reserves. China is also increasing its gold reserves to ensure greater sustainability of its reserves in case the Federal reserve will “print money”. To abandon the dollar peg in the current environment is impossible. You can increase the share of payments in other currencies, but the prices of basic goods on the world market are quoted in dollars. The increase in the volume of gold in the international reserves solves a different problem — insurance impairment loss or expropriation”.


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