Russia Copes With U.S Sanctions By Buying Gold

The Russian federation plans to overcome the new U.S sanctions by increasing its holding of gold. According to official data, Russian central bank bought 29 additional tons of gold. Previously, the central bank increased its gold reserve by 20 tons in May, and 17 tons in June. All in all, compared to January 2016, the holding increased by 37%.

Russia has been going through economic sanctions since 2015 related to its support to Ukrainian separatists, and the Crimea annexation. Recently, new pressures were raised by the United States which put tariffs on imports of steel and aluminum from Russia. The ruble value has plummeted from 55 per dollar (EUR 48) in February to 70 (EUR 60) after the US announced the new sanctions.

In the other hand, Russian central bank sold 84% of its ownership of US government debt. Now, it only represents 17% of central bank’s reserves. According to Anton Siluanov, Finance Minister, Russia will keep going on this momentum in response to sanctions. Siluanov said. "In fact, the dollar, which is considered to be the international currency, becomes a risky tool for payments."

This dual strategy is aimed at insulate the Russian economy, in particular from the dollar value.

Russia is one of the largest gold holding countries, just before China, according to the World Gold Council. The USA remains the largest one.

By Antoine Dewaest

Photo: Andrzej Barabasz