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How You Could Make £2,850 Per Month

Russia “Bought Gold” For “Diversification” - Central Bank Governor

Commodities / Gold and Silver 2015 Jun 18, 2015 - 02:05 PM GMT

By: GoldCore

Commodities

- Russia “bought gold” for “diversification” – Russian Central Governor Nabiullina
- Russian central bank prefers gold bullion to euros or dollars
-  Russia points out that other countries have a  “bigger share of gold in their reserves”
- “Can’t imagine a situation where bitcoins would be considered a reserve currency”
- On bitcoin – sees “mobility”, “expediency” and “low cost” but may regulate


The Russian Central Bank Governor told CNBC this morning that Russia has bought and will continue to buy gold bullion for “principles of diversification.”

In an interview with Geoff Cutmore of CNBC, Elvira Nabiullina was asked

Why would you be adding significant amounts of gold at this time when you could be taking euros or dollars or other foreign currencies to makeup reserves?”

Elvira Nabiullina said that the Russian central bank believes in diversification and bases itself

“upon the principles of diversification of our international reserves and we bought gold not only last year but during the previous years. Our gold mining industry is very well developed and it is ready to supply gold. That is why our attitude towards here is based upon diversification of our reserves.”


When asked whether Russia was buying gold produced in Russia in order to support the Russian gold industry as they may be struggling to export gold abroad, she disagreed and said that Russia does not have the “objective” of “supporting any specific industry” and she pointed out that Russia’s gold reserves are still quite small when compared to other countries – presumably referring to the U.S., believed to be the largest holder of gold reserves.

In terms of the share of gold, actually we are not holding the records because there are countries that have a bigger share of gold in their reserves.”

Cutmore also asks Nabiullina for her view on bitcoin as a currency or means of exchange and whether Russia would consider holding bitcoin as a reserve currency.

Nabiullina is balanced and quite positive on bitcoin but completely dismisses the possibility of using it as a reserve currency. At the same time, she realises the benefits of crypto currencies and specifically mentions “mobility”, “expediency” and “low cost.”

Russia, like all governments, is monitoring bitcoin and cryptocurrencies and should they become popular and enter the mainstream, they will seek to regulate.

Cutmore: I understand you have been looking at bitcoin, can you see a time in the near future where you may be looking to hold any reserves of bitcoin or you might authorize the use of bitcoin in Russia as a legitimate currency of exchange?

Nabiullina: So far I can’t imagine a situation where bitcoins would be considered a reserve currency but we are looking at how this market is developing, we are noting certain risks there and we’ve informed the market players that we identify these risks and because there are many representatives in that particular sector that could be resorted to some dubious operations and transactions. You know the kind of policy we conduct about dubious transactions, but we are watching over the development of this market and see that for consumers there are certain attractions in bitcoin’s mobility, expediency, low cost, so this is something definitely the market will be welcoming so we will be watching with attention and, if necessary, regulate it.

Regarding the Russian economy, she says it is quite stable despite Western sanctions.

“Sanctions are actually negative for everyone who is affected by them, they erode traditional trade ties and they decrease the potential for developing the economy and the potential for increasing workplaces,” Nabiullina said.

She said that the Russian economy could withstand any developments in the economic sense.

“We have both accumulated buffers and gold currency reserves, and we have introduced a floating currency exchange rate in order to absorb various shocks,” Nabiullina added.

The United States, the EU and a few other countries have introduced several rounds of sanctions against Russia since 2014, accusing it of meddling in Ukraine. The restrictions target several individuals, as well as Moscow’s banking, energy and defense sectors.

On Wednesday, an EU source familiar with the EU leadership told a Russian news agency that the sanctions would be extended until next January, without introduction of new restrictions.

Russia has repeatedly denied its involvement in the Ukrainian conflict, and introduced responsive measures in August 2014, banning certain food imports from the countries that imposed restrictions on Russia. Yesterday, Russian Economic Development Minister Alexei Ulyukayev said that Russia would continue the food embargo if the EU extended their sanctions.

A transcript of the CNBC interview can be read here
The video segments regarding gold and bitcoin do not appear to have been released

Download Guide:  Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,198.00, EUR 1,050.65 and GBP 752.42 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,181.70, EUR 1,045.65 and GBP 748.92 per ounce.

Gold rose $5.40 or 0.46 percent yesterday to $1,187.10 an ounce. Silver climbed $0.15 or 0.94 percent to $16.17 an ounce.

Gold in USD – 1 Week

Gold in Singapore for immediate delivery rose 0.3 percent to $1,188.16 an ounce near the end of day trading in Asia prior to good gains being seen in London which saw gold rise 1 per cent to touch $1,199 per ounce.

Yellen’s dovish comments that hinted the U.S. Fed rate hike may come later and more slowly than the market expected and decreased economic forecasts helped gold push higher yesterday and those gains have been built on today due to concerns that D-Day for Greece and its creditors fast approaches.

Market participants are now focussed on Greece who may exit the euro if they can not come to an agreement with their creditors. Gold is pushing back towards the important $1,200 level as concerns about Greece and the ramifications of a Greek default deepen.

Euro zone finance ministers meet later today in a desperate attempt to find a last minute sticking plaster for the gaping wound that is  Greece. Expectations are low that Greece and its international creditors will reach a deal to prevent the cash-strapped country from defaulting at the end of this month.

The Bank of Greece said yesterday the country’s future in the EMU and the EU itself could also be at risk without a deal, underlining the extent to which officials who once refused any suggestion of “Grexit” are now openly discussing the prospect.

The Fed voted to keep the current near-zero interest rate and said a hike would only be appropriate after the labour market sees improvement. The Fed’s board of governors have been at loggerheads over the timing of the interest rate hike.  Some are in favor of hiking rates only once in 2015 and others believe it should wait until 2016.

In late European trading gold is up 1.1 percent at $1,198.66 an ounce. Silver is up 1.4 percent at $16.40 an ounce, and platinum is up 0.97 percent at $1,090.50 an ounce.

This update can be found on the GoldCore blog here.

Stephen Flood
Chief Executive Officer

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