Business daily Nikkei Asia is reporting that strategists have noted central banks all over the globe have stepped up their gold purchases due to Russia’s assets being frozen under Western sanctions earlier this year.
So far the US and its allies have frozen $300 billion in Russian foreign reserves, as well as billions more, that belonged to private individuals and businesses. Moscow has repeatedly called the seizures “theft.”
Regulators more than quadrupled their purchases of gold during the July to September period, purchasing 399.3 tons over the period, according to data from the World Gold Council’s November report.
It was a substantial increase from the 186 tons which were purchased in the preceding quarter, and the 88.7 tons which were purchased during the first quarter of the year. So far the year-to-date total is more than any full year going back to 1967.
Emin Yurumazu, a Japan-based economist from Turkey, said that now that nations have seen how easily Russia’s overseas assets were frozen by foreign sanctions, “anti-Western countries are eager to accumulate gold holdings on hand.”
Central banks in Turkey, India, and Uzbekistan have purchased 31.2 tons, 17.5 tons, and 26.1 tons respectively. The report noted it is unclear who has purchased the remaining 300 ton total.
According to Koichiro Kamei, a financial and precious-metals analyst, purchases of that much gold being unspecified, “is unheard of.”
Itsuo Toshima, a market analyst and former Japan director for the World Gold Council said, “China likely bought a substantial amount of gold from Russia.” He believes the People’s Bank of China likely bought a portion of Russia’s gold holdings of over 2,000 tons.
He noted that would not be unprecedented. The Chinese monetary regulator did not disclose any gold purchases between 2009 and 2015, only to then report that its reserves had increased by 600 tons. Since 2019, the People’s Bank of China has not made any reports on gold purchases.
The spate of gold-buying is part of fresh attempts by central banks to reduce their exposure to the US dollar as a means of protecting their assets. That “de-dollarization” trend has been led by China, as it has sold $121.2 billion in US bonds between March and October.
