Russia plans to sell as much as 50 tons of gold this year to help plug a budget deficit in the first major bullion sale by its precious metals repository since the fall of the Soviet Union, a high level source told Reuters.
The sales from Russia's State Precious Metals and Gems Repository (Gokhran) could account for 0.5 to 1.25 percent of global consumption of the metal, which soared in price to a record of $1,070.40 per ounce on Oct.14.
What the Russians should do, instead of selling their gold, is back the ruble with gold and make it 100% convertible. This would make their currency the strongest in the world.
To solve the budget deficit problem, they should cut government spending. For 10 years when it would have been difficult for them to raise money internationally, they balanced their budgets.
Russia depends on U.S. dollar, Russian Central Bank can't do emission freely, only with cover by dollar. In another way, there is too big risks to made angry FRS, Russia really afraid WWIII. She is not ready yet.
ReplyDeleteRoberti Wetzelkov - Chief - Russian Economic Bureau
ReplyDeleteRussia may sell, Russia may buy: Bank Rossii says they are interested.
ReplyDeletehttp://newsru.com/finance/23oct2009/zlato.html
Net result: gold would replace some of USD in their reserves, which are down 3.2% YTD from $427B to $413B, yet the gold part is up from $14.5B to $18.8B and stands at 591 tons. So +50t would be +8.5% gold in their reserves.
And one more thing. The Russian govt is implementing a de facto strong ruble policy now. They are reducing money supply to keep the RUB/USD down, and it's going down. They do it even at the cost of squeezing the economy, so it must be a very high priority policy. As for gold itself, their prez paid a visit to Russian gold miners and gave them a very tense one-way conversation that can be reduced to "Must. Get. Gold. NOW." When confronted with complaints on various daily troubles with production ramp up, he literally replied: "No whining! Don't you understand? It's GOLD... (a long and awkward silence)". So, dollar reserves down, gold reserves up, gold production up, gold procurement probably up, strong currency at any cost - the policy is shaping up...
ReplyDelete