Russia loads up on 9 more tons of gold in August

Prime minister, finance minister detail plans for shunning the U.S. dollar

Last week China’s launch of its new yuan-denominated gold contract in Shanghai’s free-trade zone was the talk of the industry. Now China’s top ally in the race to dethrone the U.S. dollar – Russia – has made some headlines of its own.

Russia’s central bank has announced the purchase of 9.3 tonnes of gold bullion to its reserves in August. “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,” Mineweb’s Lawrence Williams reported. The bank has added about 1.4 million ounces of gold in the past four months.

“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.”

Williams went on to note that China and Russia also are moving ahead with new trade and currency deals, particularly in energy, with the ultimate goal of replacing the dollar as the go-to currency in such transactions.

Is there any reason to doubt that targeting the U.S. dollar is their plan? Not with top Russian ministers articulating that goal almost daily. Zero Hedge reports that Russian Prime Minister Dmitry Medvedev told Rossiya TV that Moscow and its allies “can easily make mutual settlements directly” in their own currencies and that China “is our strategic partner, and we are interested in expanding the volume of cooperation.”

Moreover, The Wall Street Journal reported that Russia's finance minister, Anton Siluanov, admitted that their goal is diversifying away from the dollar.  "[We would like to] walk away from investing in papers of the countries that impose sanctions against us," he said, referring to the U.S. and its primary debt instrument, the Treasury bond.

Siluanov announced plans to instead purchase the bonds of fellow BRICS nations, which besides Russia comprises Brazil, India, China, and South Africa, as well as channeling money into the new BRICS bank, which was established this past summer, as well as creating a new “mini-IMF” to serve the BRICS.

The dollar is at highs unseen in years, but its long-term trajectory has not been healthy. With these major economies making concrete forays into gold and nondollar trade and currency deals, the time to prepare for a weaker greenback is now, through gold.

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