Amid growing uncertainty in global financial markets, fueled by both geopolitical and trade conflicts, countries and investors traditionally seek security in gold.
In recent years, some countries have started either repatriating gold from abroad or actively purchasing the precious metal. Last year, the German central bank (Bundesbank) reclaimed 674 tons of gold reserves held in Paris and New York since the Cold War. Earlier this year, Turkish media reported that Ankara returned 220 tons of gold from overseas from the United States in 2017. At the same time, the Hungarian National Bank announced plans to repatriate 100,000 ounces (3 tons) of gold from London.
Over the past decade, central banks around the world have evolved from gold sellers to gold buyers, with formal sector activity growing 36 percent in 2017 to 366 tonnes from the previous year. Demand in the first quarter of this year increased by 42% on an annualized basis, while purchases amounted to 116.5 tons.
Russia, which currently ranks fifth among the countries with the largest gold reserves of almost 2,000 tons, has been the largest buyer of the precious metal over the past six years. In 2017, the country's Central Bank purchased 224 tons of ingots, another 106 tons in the first six months of this year. The Bank of Russia explains this strategy as part of diversifying the country's reserves from the US dollar.
About two-thirds of the national gold is reportedly held in the Central Bank vault in Moscow, with the rest held in St. Petersburg and Yekaterinburg. Russian gold is reportedly stored in bars weighing between 100 grams and 14 kilograms.
The focus of our economy on the accumulation of gold reserves dates back to the tsarist era. At that time, the precious metal was used to raise the national currency. In 1894, the gold reserves of the Russian Empire reached 1,400 tons and were the largest in the world until 1914. As a result of the First World War and the October Revolution that followed, it was necessary to repay loans to foreign banks. Most of the reserves of the tsarist era were spent by the Bolshevik government on food and industrial equipment, and by 1928 only 150 tons remained in the treasury.
During the Stalin era, the country's gold bullion reserves rose again, as Joseph Vissariona believed that the precious metal was one of the key pillars for the rapid industrialization of the economy. During this period, gold reserves increased to 2,500 tons, but by October 1991 had gradually declined to just 290 tons.
Russian gold mines are mainly located in the vicinity of Magadan. The precious metal is also mined in Chukotka, Yakutia, the Irkutsk and Amur regions, the Trans-Baikal Territory, as well as in the Sverdlovsk and Chelyabinsk regions and the republics of Buryatia and Bashkortostan.
Among the largest gold mining companies in the country; Polyus Gold, one of the 10 largest gold mining companies in the world by production volume, Toronto-Kinross Gold Corporation, as well as Russia miners Polymetal International, UGC group and GV Gold.
