Russia masks the "Golden" attacks on us dollar
Material posted: Publication date: 29-12-2014

In connection with crisis the Russian national currency, the Kremlin is increasing its gold reserves for several months. This is explained by the fact that thus needs to be saved with Russian gold mines. However, actually, the target of this strategy is the United States.

It seems that Russia and China are keen to counterbalance the hegemony of the us dollar. And not just because the celestial Empire offered its assistance to Moscow in response to the crisis of the ruble. Since 1998, in the midst of the most severe economic and financial crisis, the Kremlin itself became gradually "walk away" from the dollar.

Russia is buying gold quietly, secretly and above all, purposefully. Thereby, the country redistributes its reserves. In November — the eighth month in a row, the country increased its reserves of precious metal. On Tuesday, the international monetary Fund (IMF) stated that the gold reserves of the Central Bank increased by 603 000 oz (in terms of 18,753 tons). The final figure — 38,178 million ounces, or 1187,493 tons.

Russia: since 2005, gold reserves have increased more than three times

Since 2005, the country increased its gold reserves by more than three times. Only in the last twelve months, the Kremlin increased its reserves of the precious metal 5.5 million ounces. After the annexation of Crimea in February, the pace has noticeably increased.

Now Russia is on the fifth place among countries with the largest gold reserves in the world. Only the U.S., Germany, Italy and France have a considerable quantity of gold.

Buying precious metal is remarkable, because at present the country needs to cope with rapid large losses in its reserve. Thus, in recent months the Russian Central Bank to support the ruble and rescue state-owned enterprises, "the suffering of foreign currency, spent about one hundred billion dollars.

This led to the actions of rating agencies. On Tuesday, S&P, a leading company in the field of research in financial markets, downgrades of the Russian economy. Already in mid-January, Russia may announce a difficult situation with your credit standing. The second largest Agency Moody's sharply downgraded the growth of the Russian economy. Analysts expect that next year the Russian economy will decline by 5.5% and in 2016 — by 3%.

Against this background, the increase in gold reserves seems even more mysterious. In any case, the reduction of dollar reserves in the countries with the largest gold reserves led to the fact that now almost 10% of the state Treasury of the "covered by" the precious metal.

Russian mines can no longer "escape" from his gold

Western sanctions against Russia became the reason of buying gold. According to Reuters, the Russian Central Bank buys the products of Russian mines, because they hardly find buyers of their gold on the world market.

However, observers believe that the purchase of gold is hiding a larger plan. Thus, the largest country in the world pursues its geopolitical strategy: the Kremlin wants to become less dependent on the U.S. dollar. In the case of tougher sanctions, Moscow wants to reserve the space for financial maneuvering. Gold acts as a recognized world currency. Thus it becomes an alternative to the dominant dollar.

The U.S. can promote their political interests and to impose sanctions, due to its leading world currency. A similar hegemony gold can not speak. Increase gold reserve is something like the Declaration of independence in opposition to America. At the moment, due to sanctions Moscow wants to keep its coffers, using Western financial instruments.

Gold as a Declaration of independence from United States

This strategy fits and that other Central banks in the countries with economies in transition started to increase their gold reserves. First, Turkey and Kazakhstan were the largest buyers of gold. In November the Central Bank of Turkey increased its reserves of the precious metal to about five hundred and thirty-three tons. Many Asian countries also bought up large quantities of precious metal.

Buying gold fits into the geopolitical picture. First of all, developing countries with economies in transition want to create a counterbalance to the dominant Western financial and monetary systems. In the summer of Brazil, Russia, India, China and South Africa have teamed up to create a counterbalance to the hegemony of the us dollar. Their sole development Bank and a common reserve Fund, the BRICS countries want to resist the IMF and the world Bank. For these five countries account for 40% of the total population and one-fifth of the global performance of the economy.

No help for Russia from the IMF

The irony of history: as luck would have it, founding member of the BRICS Russia could become the first candidate to which the new development Bank could provide financial assistance. If in 1998 the country "called" the IMF, now this option seems unacceptable.

In the end the USA have veto power in the IMF. And even if the crisis of the Russian currency is based on regular scenario, experts hold the opinion that the possible help from the IMF is politically not feasible.

In a crisis situation, Russia can take the example of Ukraine. In the fight against the Kiev state bankruptcy sold most of their gold reserves. At the moment the gold reserve of the country has 832 000 oz (about twenty-four tons) — 38% less than last year.

Tags: geopolitics , gold