“For Uzbekistan, the sale of gold is quite a working way to replenish gold reserves. The country has no other way. What can be exported from Uzbekistan? Only workers and the gold that is mined there, ”continues Vyazovsky. “The Central Bank of Uzbekistan is constantly engaged in either purchases or sales of gold. He does not have a tendency towards constant gold sales, ”agrees Anton Prokudin, a leading methodologist of the Expert RA rating agency.
That is, one size fits all. “Each central bank solves its own problems. Do not take central bank gold sales as unusual. It’s a simple answer to the market situation, ”says Oksana Lukicheva, commodity analyst at Otkritie Broker.
Why did Russia start selling gold? In fact, we are talking about selling only 1.2 tons. And this can hardly be called a large-scale sale and a change in the strategy for buying gold, which the local regulator has been doing for the second decade.
“Russia has a completely different story than Turkey. We have a large volume of gold and foreign exchange reserves, and not only in gold, so we don’t have to sell it to support the ruble, ”says Vyazovsky.
“The Bank of Russia reacted to the growth of export requests and recorded a profit of 1.2 tons of metal. But relative to the accumulated reserves, this is a very small amount, ”says Lukicheva. For comparison, from the beginning of 2019 to March 2020, when the bank completed the purchase of gold, 196 tons of metal were added to the reserves.
This is most likely a purely technical story. “The Bank of Russia can sell gold to maintain target proportions between currencies and gold. He acted in a similar way last year, when the dollar-euro ratio was violated due to the active sale of dollars, ”explains Prokudin.
In recent years, Russia has been among the leaders in buying gold for the country’s reserves. As Lukicheva explains, this was done both with the aim of developing the gold mining industry and with the aim of additional emission into the Russian economy. But this year inflation may turn out to be higher than the target of 4%, so the regulator decided to suspend the purchase of gold in reserves so as not to provoke inflation acceleration even more. But when inflationary expectations normalize, the Central Bank of the Russian Federation may well return to buying gold, the expert said.
Due to the termination of the purchase of gold in reserves since March of this year, gold in bullion mined in Russia began to be actively sold abroad. As a result, in the second quarter, gold exports from Russia exceeded pipeline gas exports for the first time. The sale of 65.4 tons of gold earned $ 3.55 billion, and the sale of gas – only $ 2.4 billion (in April and May).
Apparently, such a success opened the eyes of the Russian regulator to the export possibilities of gold. At least, the other day the Bank of Russia announced a unique event. Starting from the new year, he will mint and sell the popular “George the Victorious” coins weighing an ounce. Up to 100,000 of these will be produced.
“Until now, Russia did not have its own international standard coin. The fact is that in the world gold is traded in ounces. It happened historically. An ounce is 31.1 grams. And we minted only a quarter ounce coin – 7.7 grams, ”says Aleksey Vyazovsky. According to him, the Bank of Russia made a real hell for two months by stopping the supply of George the Victorious to the market, creating a deficit. However, new batches of coins have finally entered the market and the situation has returned to normal.
“When the Ounce George the Victorious coins appear, they will be in demand all over the world. This means that Russia will be able to export gold not only in bars, but also in coins, ”says Vyazovsky.
Only institutional investors – stock exchanges (London or New York), banks and others – bought gold bullion. Whereas investment coins that are not subject to VAT, unlike bullion, can be bought by private individuals.
“Australia supplies its Kangaroo coins in millions of copies,“ American Eagle ”is sold around the world at 100-200 thousand coins per quarter. I think Europeans and other foreigners will gladly buy our coins. Russia will be able to get good foreign exchange earnings from this story. But, of course, the Central Bank, mints and dealers need to work hard so that our coin is recognized abroad, ”Vyazovsky concludes.
It is curious that, on the one hand, the demand for gold from the jewelry industry is declining. High metal prices and the consequences of the pandemic and quarantine also affect (mining in mines has decreased).
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