Russia is Dumping Its US Bonds for Gold, But Where Is It Storing Its Bullion?

Russia has been buying gold aggressively and has come in the top 5 gold holding nations in Feb-18.

This piece looks at where all this gold is being stored. This is important given the context that it has been difficult for some central banks to repatriate and store gold.

Gold repatriation operations have not been without their difficulties. In 2013, when Germany began the repatriation of its gold from the US, so-called “logistical difficulties” saw just five tons of some 300 brought home that year, giving rise to theories that the US was holding up the process. When the Dutch Central Bank launched their repatriation program, they did so on the sly, shaving their Fed gold holdings by 122.5 tons in 2014 and only announcing that they did so after the fact. Turkish President Recep Tayyip Erdogan, perhaps sensing problems with Turkey’s repatriation efforts, proposed ditching dollar loans in favor of loans “based on gold” at the recent G20 meeting in April.

But not for Russia:

Russia won’t face any headaches in repatriating any gold because its reserves are already held in the country. Nearly two-thirds of Russia’s stocks of the precious metal are held at the Central Bank’s repository in Moscow, shrouded in secrecy until recently. In 2017, a Komsomolskaya Pravda journalist became the first to get a glimpseof the Moscow storage facility, with rows and rows of containers with 20 gold bars between 12 and 13 kilograms apiece shown in a 17,000-square-meter warehouse.

The rest of Russia’s gold is stored in St. Petersburg, and the city of Ekaterinburg in the Russian Urals.

We are already seeing central banks pile up gold and repatriate gold. Signs of financial worries are leading to all this behavior…

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