Russian central bank to keep buying gold, moving away from risky paper assets
By Darya Korsunskaya
Thursday, January 24, 2013
DAVOS, Switzerland -- The Russian central bank will continue to buy gold as it seeks to diversify its foreign reserves away from paper assets it views as risky, First Deputy Chairman Alexei Ulyukayev said today.
The Bank of Russia has built up the world's fourth-largest foreign reserves, worth $530 billion, by buying oil export dollars to keep the rouble competitive. The hoard includes two rainy-day budget funds that guard against fiscal shocks.
The bank has also been a bullion buyer and the share of gold in its reserves is approaching a medium-term target of 10 percent, raising questions over whether it would keep buying gold.
... Dispatch continues below ...
How to profit in the new year with silver --
and which stocks to buy now
Future Money Trends is offering a special 16-page silver report with our forecast for 2013 that includes profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.
Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.
To learn about this report, please visit:
Ulyukayev, speaking during the World Economic Forum, said the central bank would continue to buy gold, but gave no indication on whether there would be any change in the share of its reserves it allocates to the precious metal.
"We are buying metal and will continue to pursue this course," Ulyukayev told reporters in Davos. "This is a course of asset diversification in a situation when investing in securities or deposits remains risky."
Russia's central bank is undertaking a shift from a managed float of the rouble to inflation targeting, which is leading it to scale back its accumulation of forex via market interventions as it fine-tunes interest rate policy.
But the government wants to bolster its ability to withstand economic shocks, and will transfer $30 billion in surplus revenues from last year to its fiscal Reserve Fund, meaning that the central bank's reserves will grow.
Ulyukayev oversees the Bank of Russia's asset management and is viewed as a contender to take the helm when Chairman Sergei Ignatyev retires in June. He dodged a question when asked whether President Vladimir Putin had chosen him for the job.
"It's good that he's made up his mind -- better an end to the horror than horror without end," joked Ulyukayev, a liberal economist who has published his own book of poetry.
The Kremlin dismissed reports that Putin had already made up his mind. "The process continues, but not as actively as some are writing -- there's still plenty of time," Dmitry Peskov told Reuters. A candidate should be chosen in March.
Ulyukayev, 56, has weighed into an intensifying debate over the "currency wars" that have broken out as advanced economies pursuing aggressive monetary stimulus in a bid to grow their way out of a debt trap.
He recently accused Japan of "protectionist monetary policy" and, detailing the current composition of the central bank's foreign exchange reserves, he made no mention of the yen.
According to a breakdown given a year ago, the central bank held 1.6 percent of its forex reserves in yen. It was not immediately clear whether or when that position had been sold.
Russian bankers in Davos said, meanwhile, that it would make sense for the central bank to expand its allocation to gold.
Another source familiar with the central bank's thinking said, however, that there were no plans to change the 10 percent share. Russia's central bank bought 80 tonnes of gold last year, and it plans to buy a similar amount in 2013.
At the end of last year, the central bank held nearly 950 tonnes of gold, worth some $51 billion, its figures show.
It owned 400 tonnes of gold at end of 2006 and the price of the yellow metal has since rallied by $1,000 as the regulator bought up around half of Russia's gold mining output.
Giving a breakdown of the currency portion of Russia's foreign reserves, Ulyukayev said the U.S. dollar accounted for 46 percent and the euro 40.5 percent.
Sterling has a 9 percent share, the Canadian dollar 3 percent, and the Australian dollar, added to Russia's reserves last year, at 2 percent.
Separately, he said that inflation could exceed 7 percent in February but should start to ease from March onward. Consumer inflation reached 6.6 percent in 2012.
He saw no grounds for further monetary stimulus but left open the direction of the central bank's next interest-rate move. "It could be one way or the other," he told reporters.
* * *
Join GATA here:
California Resource Investment Conference
Saturday-Sunday, February 23-24, 2013
Hyatt Regency Indian Wells Resort and Spa
Palm Desert, California
* * *
Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:
Or by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
GoldMoney adds Singapore vaulting option
In addition to its precious metals storage facilities in Hong Kong, Switzerland, Toronto, and the United Kingdom, now with GoldMoney you can store gold and silver in Singapore in a high-security vault operated by Brink's Singapore Pte Limited. To celebrate the launch of this storage option, GoldMoney is offering a discount on buy and exchange fees at this vault for any orders above US$10,000 (or the equivalent) until January 31, 2013. Tthe gold buy rate is 0.98%, while the silver rate is 1.99%. Metal exchanges into Brink's Singapore will also be discounted for this period and will be charged at 0.78% for gold and 1.75% for silver. Simply place your order online and the above rates apply automatically until January 31, 2013, 15.00 UK time. To find out more about the new vault, please visit:
GoldMoney customers can take delivery of any number of gold, silver, platinum, and palladium bars from any GoldMoney vault, as well as personally collect their bars stored in the Hong Kong, Switzerland, and U.K. vaults.
It's easy to open an account, add funds, and liquidate your investment. For more information, visit: