From Russia With GOLD

February 22, 2015

putin and gold

Something is interestingly cooking in Russia. Consider the following startling facts about Mother Russia (as many old-timers used to call her). Russia has always been a formidable force in the commodities world. However, recently it has taken the production lead in two of the world’s most essential commodities (oil and natural gas) and is now in third place for global gold production.  Specifically, Russia is today the world’s leading producer of Crude Oil (ahead of Saudi Arabia), and has beaten out the USA in Natural Gas production.  And although Russia’s yearly gold production ranks it third worldwide, its annual growth rate materially outpaces China (top ranked producer) and Australia (ranking second).

Indeed, something is interestingly cooking in Russia…and it “ain’t” borscht (arguably Russia's most popular and famous beet soup).

Consider the following data (all verifiable as of 2014 yearend):

-The Ruble vs the US$ has devalued by about 50% during the last 8 months.

-Gold’s price in Rubles has soared nearly 100% in the past 8 months.

-The Russian Central Bank in 2014 bought more gold than any other country Central Bank (+177 metric tons)….and is up +210% in the past 8 years.

-The Price of Crude Oil and Natural Gas have both plummeted about 50% in recent months. And Russia was the world’s LARGEST PRODUCER OF CRUDE OIL & NATURAL GAS for 2014.

http://en.wikipedia.org/wiki/List_of_countries_by_oil_production

http://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_production

-Russia was the second biggest gold producer in 2014. Last year it extracted 272 tons of gold, outstripped only by China with 466 tons, and just ahead of Australia producing 269 tons.

-Russia has the third largest (mine) deposits of gold (5,000 metric tons) in the world…after Australia (9,800 metric tons)  and South Africa (6,000 metric tons).

US dollars per russian rubles

The Russian Ruble vs the US$ has devalued by about 50% during the last 8 months.

ruble vs. dollar

Since June 2014 Gold’s price in Rubles has soared nearly 100% in the past 8 months.

However, it is imperative to note that the price of gold in all major world currencies has actually fallen during this same period. 

Since 2001 to December 12, 2014 the Russian Ruble price of gold has soared nearly +800%.

gold price rubles

(Source: PACIFIC Exchange Rate Service)

The price of Crude Oil has plummeted about 50% in recent months

crude oil price

The price of Natural Gas has plummeted nearly 50% in recent months

natural gas price

The Central Bank of Russia is relentlessly accumulating Gold Reserves

russian central bank gold reserves

The Central Bank of Russia is accumulating Gold Reserves faster than any other nation

russian gold reserves

In 2013 Russian gold mining production ranked it third worldwide. However, in 2014 Russian Gold Production increased, ranking it second globally…ahead of Australia.

world gold mining production

Last December Socgen spread a rumor that Russia had begun selling its gold. Subsequent IMF data showed that news was FALSE. Indeed, Russia in fact added to its gold holdings. But there was one thing it was selling: some $22 billion in US Treasuries, a record 20% of its total holdings, bringing its US paper inventory to just $86 billion in December - the lowest since June 2008.

russian holdings US treasuries

Indubitably, Russia is using some proceeds from the US Treasury sales to finance its recent substantially increased gold purchases.  It is imperative to recall that the Russian Central Bank in 2014 bought considerably more gold than any other country Central Bank (+177 metric tons)….and is up +210% in the past 8 years. 

In light of all the above, Global Monetary Experts are asking:

Could…Would…Should Russia plan to back the ruble with gold? 

All the above data suggest this.  What does President Putin really have up his sleeve?

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Related Articles:

Russia’s monetary solution     

Could Russia Back Its Currency With Gold?

Is Russia Planning A Gold-Based Currency?

Gold And Russia

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Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

78 percent of the yearly gold supply is made into jewelry.

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