Russia Accumulating Gold at Record Pace—How Will It Impact Gold Prices?

Over the last three years, Russia’s central bank has been buying gold at a breakneck pace. But it has significantly ramped up its buying since the beginning of 2014. With gold currently trading at its lowest levels since April 2010, many are wondering if Russia’s rapid accumulation of gold will impact short- and long-term prices.

The Effects of Sanctions Against Russia

The U.S., eurozone, and many countries around the world, including Australia, Canada, and Japan, imposed sanctions against Russia earlier this year, after Russia annexed Crimea in March. Further sanctions were levied against Russia after it backed pro-Russia separatists in eastern Ukraine.

Trading Gold

The sanctions were imposed on Russian banks, companies, and the energy sector. Countries also placed travel bans on Russian politicians and business people. Shortly after the first round of sanctions was announced, Russia responded with its own sanctions, including food imports from the U.S.A., Canada, the eurozone, Norway, and Australia.

The sanctions against Russia, the most aggressive since the 1991 fall of the Soviet Union, have hit the country hard. Why shore up on gold? Central banks purchase gold as a hedge against economic and political uncertainty and hold it alongside other foreign exchange assets.

The thinking is that the more gold Russia has, the better it’ll be able to withstand a financial crisis at home, in the U.S., or in Europe. The rate at which Russia is snapping up gold suggests it’s preparing for the worst.

Central Banks Around the World Buying Gold

Since 2008, in the wake of the U.S. financial crisis, central banks around the world have been increasing their gold reserves. In the third quarter of 2014 (ended September 30), central banks snapped up 93 tons of gold bullion. That represents the 15th consecutive quarter that central banks have been net buyers of gold.

Russia has been a stand-out. Since January, the country has increased its gold reserves by 10.5% (115 tons) to 1,149.8 tons. That’s almost double what Russia bought last year (77.5 tons). For comparison’s sake, Russia added 75 tons to its gold reserves in 2012. Today, gold accounts for almost 10% of Russia’s total foreign reserves. Before the conflict in Ukraine, gold only accounted for 7.9%.

Russia’s Gold Buying and the Market

What has Russia’s growing interest done to gold prices? Gold hit a four-year-plus low in mid-November, falling to below $1,150 per ounce. But it spiked higher on November 18, the day after Russia’s central bank announced its third-quarter gold bullion purchases. Buyers jumped into the market, sending gold to a two-week high of $1,200 an ounce. Have gold prices bottomed? And if there is room for gold prices to run, how high will they go? There’s no shortage of geopolitical tension or economic uncertainty.

What Does this Mean for the Average Investor?

Investors looking for a diversified portfolio should consider including gold and/or other precious metals. That said, there are different ways to invest in gold and many different investing strategies that can help you profit when the price of gold goes up or down.

It doesn’t matter if you’re an experienced investor or new to the stock market, the investing experts at Learn-To-Trade.com will teach you how to analyze technical indicators and show you how to profit trading gold or other precious metals.

For more information on Learn-To-Trade.com’s courses and Lifetime Membership, e-mail us at info@learn-to-trade.com, or call us at 416-510-5560.

Source:

“Jewellery in India, the US and the UK – the highlights of Q3 2014 global gold demand,” World Gold Council web site, November 13, 2014; www.gold.org/news-and-events/press-releases/jewellery-india-us-and-uk-highlights-q3-2014-global-gold-demand.

The following two tabs change content below.
George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

Testimonial 1

Don’t hesitate jump into it right now. You will be glad you did!

Susan C

Learn To Trade
4.0
2014-08-19T04:45:40-04:00

Susan C

Don’t hesitate jump into it right now. You will be glad you did!

Testimonials 2

The ongoing support has been the reason for my success

Patrick L

Learn To Trade
4.0
2014-08-19T04:46:33-04:00

Patrick L

The ongoing support has been the reason for my success

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

Learn To Trade
4.0
2014-08-20T02:56:18-04:00

Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

Learn To Trade
4.0
2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

Learn To Trade
5.0
2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

Partick M

I learned the basics I needed to trade successfully.

Partick M

Learn To Trade
4.0
2014-08-20T10:38:34-04:00

Partick M

I learned the basics I needed to trade successfully.

Iouri G

I like making money. I’m very happy, so far so good

Iouri G

Learn To Trade
4.0
2014-08-20T10:39:27-04:00

Iouri G

I like making money. I’m very happy, so far so good

Akos B

I learned things it would have taken me years to figure out

Akos B

Learn To Trade
5.0
2014-08-20T10:40:05-04:00

Akos B

I learned things it would have taken me years to figure out

Robert B

There is always someone ready to answer my questions.

Robert B

Learn To Trade
4.0
2014-08-20T10:40:59-04:00

Robert B

There is always someone ready to answer my questions.

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Uldus V

Learn To Trade
5.0
2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Dean K

I wish I knew about trading as a business years ago!

Dean K

Learn To Trade
4.0
2014-08-20T10:42:24-04:00

Dean K

I wish I knew about trading as a business years ago!

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Peter P

Learn To Trade
4.0
2014-08-20T10:42:57-04:00

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade
5.0
2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
Learn To Trade
5.0
2016-10-07T08:56:52-04:00
Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
4.0
14