martes, 23 de septiembre de 2014

martes, septiembre 23, 2014

Russia CB buys more gold and builds bilateral trade with China

As Russian central bank buys more gold in August, ever-closer trade ties will make them strong players in any future global currency realignment.
Author: Lawrence Williams

Posted: Monday , 22 Sep 2014 


While we will probably have to wait another few days until the IMF publishes its latest statistics for the global picture, the Russian central bank has announced that it has added another 9.3 tonnes of gold to its official gold reserves. This is as tensions now seem to be diminishing in Ukraine which could, if the latest agreement holds, lead to Western sanctions against Russia being gradually withdrawn.
Russian gold reserves now stand at 1,113.5 tonnes, the world’s fifth largest national holding, thus climbing even further above China’s 'official' 1,054 tonnes. However few out there seem to believe that China doesn’t have more gold than it announces to the IMF, but is holding considerable amounts in some other government controlled accounts. Overall Russia has just about doubled its gold reserves since the 2007/2008 financial crisis and its central bank has been a net buyer almost every month since. The figures suggest that that the monthly increases have primarily come from the central bank taking in a significant proportion of the country’s domestic gold output which averaged around 20 tonnes a month in 2013; last year Russia was the world’s third largest producer of gold and this year could surpass Australia and move into the No. 2 position behind China.
Gold producing nations
Rank
Country
2012 output  
(Tonnes)
2013 output
(Tonnes)
1
China
413
438
2
Australia
252
265
3
Russian Federation
229
249
4
USA
235
231
5
South Africa
180
182
6
Peru
185
179
7
Canada
105
125
8
Mexico
104
104
9
Ghana
99
102
10
Indonesia
88
96

Global
2875
3009
Source: Metals Focus/Mineweb
In parallel with its pursuit of gold, Russia continues to build its bilateral financial and trade relationships with China. At the beginning of this month Russia’s President Putin and Chinese Vice Premier Zhang Gaoli officially launched the construction of the first part of Russia’s Gazprom’s Power of Siberia pipeline - which will deliver 4 trillion m3 of gas to China over 30 years. While some aspects of construction may yet be delayed because of the impact of Western sanctions against Russia, the pipeline schedule calls for first natural gas deliveries in 2019.  When completed, at an estimated cost of some US$70 billion, it will have been, according to the Russian and Chinese officials, be the world’s largest construction project with the pipeline running for just under 4,000 km, plus associated infrastructure, and supply gas to China’s populous northeastern region, as well as Russia’s Far East. China is due to start pipeline construction at its end next year.
At the inauguration ceremony Russia Today quoted President Putin as saying “The new gas branch will significantly strengthen the economic cooperation with countries in the Asia-Pacific region and above all - our key partner China”. The 'key partner' phraseology is undoubtedly significant as it further suggests that Russia is looking to dramatically reduce its dependence on the West for oil and gas exports and probably in a number of other trade aspects too, while China looks to diversify and build trade with the other global superpower (after the U.S. and itself) as it seeks powerful allies to boost its case for becoming at least a significant participant in any new global reserve currency that will probably arise sooner rather than later. Reserve currency change looks inevitable in the medium to long term as global economic balances shift and may bring China into increasing economic conflict with the U.S. although this will likely be downplayed by both governments. But, as we noted in another recent article, China is very much a long term player in the global economic game.
Russia, like China, perhaps somewhat belatedly, has come to see its gold holdings as a significant positive in any new world financial order that may develop over the next decade.  American financial policy has dominated world trade for almost a century but there are powerful economic forces out there – notably involving various countries, including China and Russia, building trade ties in their own domestic currencies and thus starting to bypass the dollar. Energy trade is particularly significant in this respect as the U.S. dominance in setting the terms of world trade has been very much down to the virtually total dominance of the dollar in global oil and gas transactions.
Historically the country with the most gold has been able to dominate global trade – barbarous relic or no – and while the West may see this coming to an end there is an enormous, and ever wealthier, part of the world’s population which still believes in gold as the key global monetary asset. China and Russia are both strong believers in gold and the potential negotiating position it enables. At some stage soon the validity of their belief is going to be put to the test.

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