FT.com | Money Supply | Russia sells gold to itself

FT.com | Money Supply | Russia sells gold to itself: "Russia sells gold to itself
December 14, 2009 3:47pm
by Emma Saunders

The Russian central bank will spend $1bn next week, buying 30 metric tons of gold from Gokhran, the state repository. Gokhran had planned to sell 20-50 MT on the open market, but cancelled after news of the sale leaked. The sale would have helped plug Russia’s budget deficit, and, apparently, purchase some diamonds from state-run miner Alrosa.

The price of gold would have fallen had Russia released so much to the market at once, which would not favour Russia, whose total gold reserves are valued at $20bn. Ironically, the (dollar) price of gold has fallen anyway, as the dollar has strengthened: prices are down more than $100 from their December 3 highs, although gold is still up 27 per cent year to date.

The sale has further reduced Russia’s gold security, a comparison between gold reserves and GDP. Click on the chart for more."