Russia Buys 22 Tons Of Gold In May

Tyler Durden's picture

Ten days ago we reported the most recent data on gold reserve holdings as presented by the World Gold Council, where we pointed out that Russia had purchased 27.6 tons of gold in the most recent reporting period, bringing its total to 668.6 tons. It appears Russia is only getting started. According to the latest IMF data, in the period between April and May, Russia added another 22.5 tons, bringing its May total to a fresh record of 703.1 tons. As BusinessWeek reports, Russia "has added gold every month since at least February." At the same time, The International Monetary Fund’s gold holdings fell by 15.25 metric
tons (490,286 ounces). "Reserves of gold at the IMF were 2,951.58 tons at the end of May
compared with 2,966.83 tons at the end of April, data on the IMF’s
website show." Good thing the world's bailout cop is doing all it can to keep gold
prices low by transacting in the open market instead of in prenegotiated transaction. Again, per BusinessWeek, this “is an indication that they will continue to sell the remaining
137.5 tons on-market as opposed to via off-market transactions with
other central banks,” said Daniel Major, an analyst at Royal Bank of
Scotland Group Plc in London. “Indeed the decline in gold sales from
European central banks and purchases from India, Russia and China in
recent years demonstrates gold’s growing popularity with central banks.” Well, all Central Banks except those that are printer happy of course, and are now loaded to the gills with toxic debt that will continue to impair their currencies until the bitter Keynesian end.

Central banks have been adding to reserves and gold-backed
exchange-traded fund assets have advanced to a record as investors
sought an alternative to currencies and a protection of wealth from
Europe’s debt crisis. Gold traded at $1,243.45 an ounce at 4:16 p.m. in
London and reached a record $1,265.30 on June 21.

While the paradoxical IMF's agenda is all too clear (sell gold, get cash, but help the CB's by keeping price low), that of Russia is even clearer- never mind all time record gold prices. Buy. In that, Putin's country is a spitting image of the GLD, which has added almost a hundred tons of gold in recent weeks, price considerations be damned.

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Mr Lennon Hendrix's picture

Gold is hovering at its inflection point, it is waiting for silver to hit its cross ($18.61) and Platinum too ($1533).

T minus 15 minutes and counting.......

sheeple's picture

FOFOA has a new article, luv it!

Mr Lennon Hendrix's picture

Recommending reading by sheeple....

Thanks bro!

And the cross is lined up, 11:11 PST.

Your move PPT.

Mr Lennon Hendrix's picture

Bawknee rang the dinner bell.  "Eweben Eweben, Pathipid standawd time!  Gwoup meedeen, gwoop meadeen!"  Timmah was busy playing Nintendo, LawWrench was passed out on the hammack, and BS was already sloshed on Malibu and coffee.  BS ran into the room.  "Timmah, go and wake LawWrench up, then come have a seat at the table."  Bawknee was already sitting at the table obediently.  Timmah muttered something under his breathe, "Timmah, timmah, timmah..." hit pause, and ran outside.  "TIMMAH!"  He screamed!  LawWrench awoke.  "Who?  What?  Huh?....Oh, what time is it?"  "Timmah."  Said Timmah.  "Oh, ok, I'll be in in a minute. Have a cold one ready for me when I get inside, and tell BS to go ahead and start."  Timmah ran off once again muttering under his breathe.  He grabbed a Coke out of the fridge, but not before shaking it up.  He slammed it on the table and sat down.

"Ok, I'ma go ahead and start."  Said BS.  "Today we have a decision to make.  Either we do a ramp job all out that gains us 3% in equities..."  Outside you could hear LawWrench yell, "RAMPJOB!!!"  ...."Or, we keep the market where it is.  If we do the rampjob..."  Once again LawWrench yelled, "RAMPJOB!!!"  "...If we do the rampjob, gold will need to move to roughly $1288, which would be an obvious break to the upside.  Silver would move to the top of its recent range.  Questions?"

"Ith it indoubably pothible to gain a wampjowb widout dee notithabawl epects ob gowld an silbel mobeen simoltaniouthwee in deth magnitood?"  "What??"  BS asked.  Timmah rolled his eyes, "Timmah!"  "Ith der anyofel weigh to moob da markeths wifoud mading obious dee cowiwacion ob gowl an silbel?"  "Ummm, well, we have down it before, but that guy Durden from Zer Hedge caught us manipulating trades.  We do not want to show his credibility.  "Timmah was visibly angry at this news.  "TIMMAH!"  He said as he slammed his fist to the table.  Just then, LawWrench came in.

"Ok, so rampjob it is, let's go!"  He sat down and opened his coke.  The weaponized chemicals spewed everywhere; Timmah giggled, "Timmah!".  "Damn it Timmah!  Go get a napkin and clean up this mess."  Timmah slumped into the kitchen, holding his breathe and muttering, "Timmah, Timmah Timmah!"

"Lawee, id isthint dat simpol, expwain it to him Bennie!"  "Did I ask you anything!"  Bellowed LawWrench.  "I don't need anything explained to me.  Timmah, where is that napkin.  I am waiting!"  "Larry, look,"  BS leaned forward, his eyes were slits.  He said sloppily, "You and I both know what will happen if we let up on the"...his voice cracked..."metals."  "I don't care!  Nobody has figured it out this far!  You think they will now?!  Timmah!!!"  Timmah scurried back to the table and threw napkins everywhere as he sat down.  "You call that cleaning up?  Clean it up!!!"  "Timmah!!"  Screamed Timmah.  He stared at LawWrench.  "What?  Whatcha gonna do?"

"Ok ok enough."  Said BS.  He looked kindly in Bawknee's general direction, as he was having trouble with his motor functions.  "Bawknee, will you please clean up the Coke."  Bawknee smiled.  "Ohkayee."  "Bawknee after you are done get me a coke....and don't shake it up."  Bawknee finished cleaning and went back into the kitchen to retrieve the drink.

"Ok, now, lets discuss..."  BS poured himself another drink, coke and Malibu this time.  LawWrench's mouth watered as he watched.  "Rampjob or not, and we know what LawWrench thinks.."  LawWrench interrupted, "Huh, what?  Rampjob...yes, yes."  BS looked towards Timmah, "Timmah, what say you?"  "Timmah."  He said, matter of factly. 

BS had a tough decision to make.  All would have to agree that a rampjob was in order (clause 4 article 5 section 6 of the PPT rulebook dictates all parties must confirm a rampjob).  BS also knew that the time was nigh to either break equities in hope of another QE, or merely let the doelarr slip and head into another bout of inflation.  At this point it was a lose lose situation for him and the group, but he wanted to choose the lesser of the two evils.  He thought deeply as he sipped his drink.

"Damn it, Bawknee, where's my COKE!!!"

Mr Lennon Hendrix's picture

Just then the phone rang.  "Bawknee get the phone."  BS said with a gentle tone.  "Hewo?"  "Damn it, where's my rampjob!"  "Who ith dith?"  "It's me Baawknee.  Now go get someone who knows what they are doing, if any of you know what you are doing!"  Bawknee scurried into the living room.  "Bennie, Woyed ith on da foone."  Bawknee's eyes teared up as he was still traumatized from the day before, when Lord Blankcheck had tied him to the clubhouse tree and sprayed him with black paint.  Bawknee had told him he was working on revising the bill to replace the bank tax with TARP (taxpayer) monie, but Lord continued anyway, until the rest of the gang showed up and enforced Lord's wishes on CONgress.

"Lord, it's Ben."  "Bennie boy what the hell are you waiting for?"  "Lord this isn't a simple decision..."  "Decision?  Don't make me collapse the market again!"  BS was a little tired of Lord's threats, but didn't want to upset him; he knew Lord was capable of committing complete market suicide, and did not want to call his bluff right now.  "Look, just give me till 3:30."  "You think you can ramp 3 full starting at 3:30?  Good luck!"  BS heard the phone slam down from the other side.  BS tried to hang up the ol' rotary phone several times, each time he missed.  "Wet me help you wit dat."  The two's hands touched as Bawknee steadied the phone onto the clip.  They smiled at each other. "Thanks Bawknee."

"Whadhe want?"  LawWrench took a swig of his Coke and raised his eyebrows.  "Lord wants a rampjob."  "The question was rhetorical!  We all want a rampjob, and if you had done it earlier, we could have gotten it done by now!"  "Timmah."  Said Timmah, he was in agreement.  "I know, I know."  Said BS.  He rubbed his brow.  He really did not want to do it.  He was sick and tired of pretending he didn't know they whole financial system was leveraged on gold, but his economic philosophy dictated it. 

saulysw's picture

It might just be me, but I think these are great fun to read. Bravo!

Mr Lennon Hendrix's picture

Ruh ro....support broken...big down side move coming unless they go full bore ramp job.....

Mr Lennon Hendrix's picture

Platinum does not.....you will need all three, boys....

Mr Lennon Hendrix's picture

Now it does!  This could be interesting, we may see a 3% gain across the board going into the close....

Mr Lennon Hendrix's picture

Flash crash, and this could be huge.

Shameful's picture

You'd think that GLD and Russia adding physical would put a lot of price pressure on gold.  Would love to know where the gold is coming from and how "real" it is.  After all we have all heard about Sprott and the IMF.  Who knows maybe the IMF is just selling to Russia then.

Steaming_Wookie_Doo's picture

You'd think, huh? I guess JPM et al are doing their level best to keep it down.

Yes, my question is: where did the IMF get all its gold from? And why on God's green earth would they want to trade it for any variety of fiat bux? Also I would like to know if buyers are getting physical delivery or is this more "store credit" at the IMF.

DosZap's picture

Steaming ,

You can bet your ass, Russia is not taking IOU's from the IMF.

They are smart like a Fox.........

22.5 Tons?........Had to be IMF, no one else is stupid enough to dump it.

knukles's picture

One of the latest WGC reports noted that for some time, Russia has been a net purchaser of gold mainly by buying up all of their domestic production. 
Changes not any aggregate demand or supply data, but does remove their domestic production from the "rest of the world" calculations by and large, and thus inferencess regarding IMF positions.

Shameful's picture

While I do not doubt that Russia is buying local production like China, doesn't that impact the % of gold available for GLD and us little guys?  I can accept that Russia is only buying local production, but that takes the supplies off the market and puts a higher % on the GLD buying of total world production.  The problem is there is a limited production here and several large players and a host of smaller ones are all buying.  Seems to me that would move the price up, and probably a bit more then has been seen.

Gordon_Gekko's picture

Russia = Real (probably)

GLD = fake, fake, FAKE!

That said, in today's tight physical Gold market even Russia buying what it is should put pressure on the price...my guess is that the paper Gold market is close to breaking and it most likely will not survive 2011. Yes, we're THAT close.

Shameful's picture

I'm inclined to agree that the GLD purchase are not real.  It may be we are that close to the snapping of the system.  Personally I hope there is enough juice in the con mens tank to take us into 2012, but then I'm glad that it's gone on this long and given me a chance to get in.  Remember buying my first gold bar at 940 and thinking "Man this stuff is expensive!", now would love to get teh chance to buy at that level again...

DoChenRollingBearing's picture

About 7 years ago, I remember paying $900 for a Platinum Eagle.  I walked away kind of angry, that I had overpaid for an oz of Pt.

Fortunately I got over it!

Sounds like you got over paying the expensive Gold oz at $940...

Arius's picture

u got the right name....shame on you...want to get it at 940 again...what about bonuses for TGL, christian whatever (the guy who keeps scaring everybody saying the gold will crash)...think about them too....they are taking the other side of the trade allowing you these cheap prices....otherwise...well will see where it will go, when in the words of blankfein aka "the trader/the scalper" they will not provide liquidity...its coming soon...none will sell...and everyone would like to buy...price discovery here we come...

nuinut's picture

GLD's custodian, HSBC, USA., is the second largest holder of Comex short positions in both gold and silver.

knukles's picture

Whappa Pazoola Batman!
GLD encumbered by and with it's own custodian mayhaps? 
Waddaya waddaya GLD's trustee give approvals, if so?
HSBC shorts held as thier own account or on behalf of other Nefarious Powers That Be?  Who be meeting their variation margin outflows?  Who be getting the juice on the long side? 

'Nuff to make a good spy novel. 

tmosley's picture

I tend to agree, but I thought the same thing in 2008, so what the hell do I know?

Well, other than the fact that I knew enough to sink 50+% of my earnings into silver.

sheeple's picture

is 1250 the "IMF" bottom? [just like Brown bottom 10 yrs ago]

Arius's picture

+1

good one --- the new bottom

doomandbloom's picture

damn! those Russian spies are GOOD....

Clayton Bigsby's picture

what's with cookie monster?  does that mean she likes furries?  time to go rent me a grover costume

SDRII's picture

The report by the UN blasting the dollar and urging a move to SDR is telling in this regard - does the pre emption doctine apply to fiat/monetary policy

Oracle of Kypseli's picture

What's not clear to me is why would anybody (countries) be selling gold.

I can understand dealers who buy and sell with margins up and down. But when governments can print money, why sell gold?

Any thoughts?

Shameful's picture

The US (and US establishment) has a vested interest to see gold prices down. Even Summers has written about the importance of the US to keep gold prices down. Strong gold is a direct attack on the dollar system.

Other nations that would be sellers are going to likely be in the US sphere of influence.  Selling gold to keep the price down is in the US interest to keep the con of the dollar alive and well.

Arius's picture

i dont think thats true...its just bullshit to steal the gold from whoever got it and then change the rules...

Yikes's picture

First thing that comes to mind is they (reserve currencies) must ensure confidence in their fiat.  Any increase in gold erodes that confidence.  They don't want to do it but they have to do it: it's literally life or death.

On the flip side, other countries who might wish to elevate their currency to reserve status builds it gold reserve to indicate to the world they have hard stuff as backup. 

knukles's picture

Ah, directly to the Heart of the Matter!  Bingo!

As may be noted, on balance for the last number of years, countries in the aggregate have not been sellers, but buyers of gold.  You know, adding to that barbaric relic for their own accounts which they continue to horde away, whilst claiming "it of the dubious value".

Note for example, why Greece, the proud owner of 112 tonnes of gold representing 73.2% of reserves, has not sold any to defease its obligations but has resorted to recirculating an endless supply of fiat currency. 

Why?  Gold is thus, by demonstration of the very behavior of central banks, valuable whilst fiat currencies, not.  Gresham's Law.

The value in the shorting of Paper Gold to the central banks is that thereby the illusion of the fiat currency retaining value relative to a recognized benchmark, is preserved.

Indeed.  Why sell gold when one can print infinite monies?  Further, Larry Summers once wrote a paper on Gibson's Paradox which expounded upon the idea that if the price of gold were maintained at a low level, it would be beneficial for economic activity through lower inflation expectations, interest rates, etc.

Let's all just go figure, eh?

traderjoe's picture

If you were a giant fiat ponzi scheme like the US - why wouldn't you sell gold? You get to prop up your system with that last little bit of funny money. And if you believe in the fiat, you don't believe in the gold, and it's not like you actually have enough to make a difference anyway. 

If you are a reserve surplus nation, why wouldn't you sell your soon-to-be-worthless banknotes for gold? Or bullets, food, resources, etc.

Arius's picture

'- why wouldn't you sell gold?'

because was the currency for 6000 years until 1971, and in 1971 there was no discovery of gold in Mars or Tora Bora....gold is still in limited supply...the emperor just has no clothes...and for 40 years none was willing to say it...now the emperor is getting older, weaker and the young princes are willing to flex the muscles...will see what happens, but just because what happened in the last 40 years, if i had to bet would not bet against 6000 years of history...people and things have not changed that much...as much as we like to think they have...

ReallySparky's picture

Very, very interesting.  Sounds like from the looks of things that a financial war is starting.  We have soooo much debt, I am sure that we will win.

Temporalist's picture

Hah!  I guess we should all get more credit cards to max out and triple mortgages and lease 12 cars and overleverage margin accounts and then we'll all win and be rich.

Nathan Smith's picture

So the IMF will sell into the open market, but they won't sell to Eric Sprott.

What exactly is the difference (rhetorical)?

LoneStarHog's picture

The difference is that IMF sales (India) have been journal entries.  India was a repository for IMF gold.  Eric Sprott wants PHYSICAL DELIVERY of his gold.  If the IMF sold it to him, THEY COULD NOT DELIVER!

This is also why China could not purchase the so-called IMF gold, as China would have expected PHYSICAL DELIVERY.

How many times can the IMF sell the SAME gold and claim that they still have it?

doolittlegeorge's picture

yeah.  we all know what a "creative" banking system Russia has.  Needless to say right up there with the Aussie dollar and Canadian dollar getting clobbered I hear there's "quite a lot of selling in the Russian market" today.

Dantzler's picture

Found this piece over on Jesse's site.

Rickards on Russia, Au, & USD collapse (skip to page 95 [19 of 42 in pdf]

http://www.jhuapl.edu/urw_symposium/proceedings/2009/Authors/Rickards.pdf

excerpts at the Cafe:

http://jessescrossroadscafe.blogspot.com/2010/06/jim-rickards-on-economic-war.html

 

nuinut's picture

 

http://www.jhuapl.edu/urw_symposium/proceedings/2009/Authors/Rickards.pdf


"Worse even than the long, slow grind along the bottom described in the foregoing section is a sudden catastrophic collapse. In that context, the greatest threat to U.S. national security is the destruction of the U.S. dollar as an international medium of exchange. By destruction we do not mean total elimination but rather a devaluation of 50 percent or more versus broad-based indices of purchasing power for goods, services, and commodities and the dollar’s displacement globally by a more widely accepted medium.

The intention of Central Bank of Russia would be to cause a 50 percent overnight devaluation of the U.S. dollar and displace the U.S. dollar as the leading global reserve currency. The expected market value of gold resulting from this exchange offer is $4,000 per ounce, i.e., the market clearing price for gold as money on a one-for-one basis. Russia could begin buying gold “at the market” (i.e., perhaps $1,000 per ounce initially); however, over time its persistent buying would push gold-as-money to the clearing price of $4,000 per ounce. However, gold selling would stop long before Russia was out of cash as market participants came to realize that they preferred holding gold at the new higher dollar-denominated level. Gold will actually be constant, e.g., at one ounce = 25 barrels of oil; it is the dollar that depreciates.

Another important concept is the idea of setting the global price by using the marginal price. Russia does not have to buy all the gold in the world. It just has to buy the marginal ounce and credibly stand ready to buy more. At that point, all of the gold in the world will reprice automatically to the level offered by the highest bidder, i.e., Russia.

Basically, the mechanism is to switch the numeraire from dollars to gold; then things start to look different and the dollar looks like just another repudiated currency as happened in Weimar and Zimbabwe. Russia's paper losses on its dollar securities are more than compensated for by (a) getting paid in gold for its oil, (b) the increase in the value of its gold holdings (in dollars), and (c) watching the dollar collapse worldwide."

 

So the world will wake up to find a new dollar/gold equilibrium. If China joins Russia in this plan, its success is assured.

 

Fix It Again Timmy's picture

I sell gold [my country's] simply because it is not mine and I am told to do it; also because I have my own personal gold and income streams that preserve my wealth and provide cash when needed - Timmy.

doolittlegeorge's picture

I mean perhaps I'm overstating the intelligence of everyone here but what I'm saying is "we're Russia and we'll take 25% interest rates on our debt so long as we have "our" gold."

Temporalist's picture
It's even hitting CNN and Fortune Magazine

 

Russian 'spies,' goldbugs and the struggling dollar

Was the alleged Russian spying, in part, a commodities or currency play?

by Heidi N. Moore, contributor

"The problem with all the gold buying, of course, is that it often reads as a global central bank reproach to several currencies, but particularly toward our troubled U.S. dollar. As the World Gold Council wrote in a February report on gold, currencies and the money supply, "gold exhibits a strong negative correlation to the dollar."

This is where central bank currency moves could get sinister. Rickards wrote a paper, "Economics and Financial Attacks," and created an imaginary Pentagon war game describing a crisis situation in which Russia used its gold reserves to create a new global currency and destroy the value of the American dollar. In the May 2009 paper, Rickards suggested that U.S. intelligence agencies would do well to track the gold reserves of other countries -- just in case."

http://wallstreet.blogs.fortune.cnn.com/2010/06/29/russian-spies-goldbug...

AssFire's picture

Read this. Concerning the Spies info...They could have just read ZH instead of relying on "spies"

http://news.goldseek.com/GATA/1277823532.php