Business : Russia to sell 20-50 T gold in 2009

Business : Russia to sell 20-50 T gold in 2009

Russia to sell 20-50 T gold in 2009

(Reuters)

23 October 2009

MOSCOW - Russia plans to sell as much as 50 tonnes of gold this year to help plug a budget deficit in the first major bullion sales by its precious metals repository since the fall of the Soviet Union, a high level source told Reuters. The sales from Russia’s State Precious Metals and Gems Repository (Gokhran) could account for 0.5 to 1.25 percent of global consumption of the metal, which soared in price to a record of $1,070.40 per ounce on Oct.14. “More than 20 tonnes, but less than 50 tonnes of gold will be supplied this year,” the source familiar with the matter said on Friday, adding that the sale was intended to increase state budget revenues. The source said the sale would be the first major gold sale by Gokhran since the fall of the Soviet Union, which kept a veil of secrecy over its sometimes significant foreign sales of gems and precious metals. Two other sources in the Russian government confirmed the planned gold sale but declined to comment on the volumes involved. The sales will be carried out by state owned Almazjuvelirexport. Government spokesman Dmitry Peskov said a government resolution allowing the sale had not yet been signed. Gokhran, which traces its history to a decree by Tsar Peter the Great in 1719, holds the Russian state’s stocks of precious metals such as gold and palladium and gems such as diamonds. The size of Gokhran’s stocks is a state secret and disclosure is punishable by imprisonment, though traders say Gokhran’s stocks are thought to be sizeable. Russia was the world’s fifth-largest gold producer last year, accounting for about 7 percent of global output. Russia sells gold Gold, which is viewed as safe haven in uncertain times, has soared in recent weeks as investors seek protection against declines in the value of the U.S. dollar. After hitting record highs above $1,070 per ounce last week, gold prices have been in a narrow range centering around $1,060, giving Russia the chance to raise as much as $1.7 billion if Gokhran sold 50 tonnes of bullion. That would help it cover its first budget deficit in a decade that is forecast to total nearly $100 billion this year, or about 7.5-7.7 percent of gross domestic product. Gokhran is subordinated to the Finance Ministry. Under a government order signed at the start of the year, Gokhran is allowed to sell precious metals worth 44.4 billion roubles ($1.53 billion) in 2009. Gokhran plans to buy around 5 tonnes of gold from domestic producers, or about 3 percent of the total expected to be produced in Russia this year. Stocks of gold held by the Central Bank as part of its international reserves have risen in the last nine month by 14 percent to 19 million ounces.