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Russia Flips Petrodollar On Its Head By Exporting Crude, Buying Record Gold

Tyler Durden's picture


China has been a very active purchaser of gold for its reserves in the last few years, as we extensively covered here and here, but another nation has taken over the 'biggest buyer' role (for the same reasons as China).


Central banks around the world have printed money to escape the global financial crisis, and as Bloomberg reports, IMF data shows Russia added 570 metric tons in the past decade. Putin's fears that "the U.S. is endangering the global economy by abusing its dollar monopoly," are clearly being taken seriously as the world's largest oil producer turns black gold into hard assets. A lawmaker in Putin's party noted, "the more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency."

Putin’s gold strategy fits in with his resource nationalism, statist agenda, as Bloomberg notes when Russia defaulted in 1998 it took 28 barrels of oil to buy one ounce of gold, was 11.5 barrels when Putin came to power and when in 2005 it had fallen to 6.5 barrels (less than half what it is now), he went all in, telling the central bank to buy.

Russia has gone through bouts of hoarding before - from 1867's Tsar Alexander II to Lenin, for now, with more than five years left in Putin’s term, Russia plans to keep on buying - "The pace will be determined by the market," First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. "Whether to speed that up or slow it down is a market decision and I’m not going to discuss it."



Via Bloomberg,

Putin Turns Black Gold Into Bullion as Russia Out-Buys World


When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.


Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.


“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.




In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, Bloomberg data show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 -- less than half what it is now -- the president told the central bank to buy.


During a tour that November of the Magadan region in the Far East, where Polyus Gold International Ltd. and Polymetal International Plc have operations, Putin told Bank Rossii not to “shy away” from the metal. “After all, they’re called gold and currency reserves for a reason,” Putin said, according to a Kremlin transcript.


Lucky Guy


At the time, gold was trading at an 18-year high of $495 an ounce and the Moscow-based central bank held 387 tons, or 2.2 percent of its $165 billion total reserves. The share reached 3.5 percent within a month, according to data compiled by Bloomberg.


An ounce of gold for immediate delivery traded at $1,670 as of 7:24 p.m. Moscow time on Feb. 8. It rose 7 percent last year, the 12th straight year of gains. Analysts expect the metal to advance again in 2013, to $1,825 by the end of the year, according to the median of 26 forecasts in a Bloomberg survey.


“Putin’s gold strategy fits in with his resource nationalism, statist agenda,” said Tim Ash, head of emerging- market research at Standard Bank Plc in London. “It’s kind of a defensive play, but it worked, right?” Ash said in an interview in Moscow. “You need luck in politics and business, and clearly the guy has it.”


Brown’s Bottom


Other world leaders haven’t been as lucky. Gordon Brown, as U.K. finance minister, sold almost 400 tons of gold in the 30 months to March 2002, when prices were at two-decade lows. London tabloids have referred to the period as Brown’s Bottom.


Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons,




While Putin is leading the gold rush in emerging markets, developed nations are liquidating. Switzerland unloaded the most in the past decade, 877 tons, an amount now worth about $48 billion, according to International Monetary Fund data through November. France was second with 589 tons, while Spain, the Netherlands and Portugal each sold more than 200 tons.


No Hoard


Communist secrecy regarding the country’s gold holdings fueled speculation that party elites had amassed a huge hoard of bullion that they spirited out of the country before the Soviet Union disintegrated in 1991.




“When people ask about the party’s gold, my answer is always: Are you an idiot or something?” Gerashchenko, 75, told Afisha magazine.


For now, with more than five years left in Putin’s term, Russia plans to keep on buying.


“The pace will be determined by the market,” First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. “Whether to speed that up or slow it down is a market decision and I’m not going to discuss it.”

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Sun, 02/10/2013 - 21:25 | 3231806 TahoeBilly2012
TahoeBilly2012's picture

Geez open up Fort Knox all ready the suspense is killing me!

Sun, 02/10/2013 - 21:30 | 3231831 Dr.
Dr.'s picture

It sure will be an interesting situation. "we would now like to have access to our lent out tonnage of gold please and don't try settling in GLD" 


I guess the best the Russians could do is to actually "borrow" the asset directly from the Fort, have it deliverd to Moscow and safe-guard it there against deflationary pressures  /sarc off

Sun, 02/10/2013 - 21:40 | 3231858 MrX
MrX's picture

Richie Budd sums it all up nicely:


Sun, 02/10/2013 - 23:23 | 3232035 DoChenRollingBearing
DoChenRollingBearing's picture

A new magazine (American Hard Assets) has just hit the shelves (at Barnes & Noble anyway).  Because Barron's just cannot seem to get delivered to my town on the weekends, I reviewed this premier edition of "AHA".  LOTS of "gold porn" and good articles, I like the magazine and will probably subscribe.

"Review of American Hard Assets"


Mon, 02/11/2013 - 00:33 | 3232257 ratso
ratso's picture

Right, we should take our guidance from Putin.  Pass the bong.

Mon, 02/11/2013 - 01:50 | 3232353 strannick
strannick's picture

No, take your monetary guidance from gold, like Putin. If you have dollars in a bank, then roll another one just like the other one.

Mon, 02/11/2013 - 07:08 | 3232507 malikai
malikai's picture

While we're on about Russia/China, what's up with Soybean? Does this have something to do with the Chinese New Year? I don't typically work with softs but wow anyway.


Mon, 02/11/2013 - 09:55 | 3232822 FEDbuster
FEDbuster's picture

"American Hard Assets" magazine sounds like something you might find on a San Francisco, Key West, Fire Island or SEC office coffee table?

Mon, 02/11/2013 - 00:33 | 3232258 jeff montanye
jeff montanye's picture

speaking of brown's bottom and repatriation of gold, jesse had a good article from australia:


looks like the aussie central bank did brown a bit better.

Sun, 02/10/2013 - 21:58 | 3231897 Al Gorerhythm
Al Gorerhythm's picture

I'm not so much interested in their stash, I'm more interested in their book(s).

Sun, 02/10/2013 - 22:47 | 3232017 FL_Conservative
FL_Conservative's picture

Bernanke's axis of evil: gold, silver and Ron Paul.

Sun, 02/10/2013 - 21:23 | 3231812 vft2212
vft2212's picture

Total BS. This is just confirmation rasPutin will abscond with any gold that remains in Russia when he must leave as all others with USA policy have before him. The #USD hasn't made a new low in 4+ years & gold hasn't made a new high in 1 1/2 years. Oil for gold rather than oil for food in Russia.

Sun, 02/10/2013 - 22:06 | 3231925 W74
W74's picture

Implying Russia doesn't grow anything.

Sun, 02/10/2013 - 22:44 | 3232011 vft2212
vft2212's picture

Hottest young ladies on the planet, if you include Ukraine

Mon, 02/11/2013 - 03:25 | 3232418 SilverRhino
SilverRhino's picture

And some of the most mercenary as well.   YMMV.   


Mon, 02/11/2013 - 03:45 | 3232431 Raymond Reason
Raymond Reason's picture

You're shopping in the jewish quarter. 

Mon, 02/11/2013 - 03:40 | 3232429 Raymond Reason
Raymond Reason's picture

Finest ballerinas too.  Long legs, perfect bone structure. 

Sun, 02/10/2013 - 21:23 | 3231814 Squid Vicious
Squid Vicious's picture

I'm pretty sure Putin will be a favorite candidate in 2013 for our 5 minutes of hate, via western MSM

Sun, 02/10/2013 - 21:30 | 3231832 magpie
magpie's picture

Yes, and throw your eagles and maples on the floor and stamp on them after the screening

Mon, 02/11/2013 - 05:16 | 3232464 Wile-E-Coyote
Wile-E-Coyote's picture

We have always been at war with Russia (two minutes of hate)

Sun, 02/10/2013 - 21:24 | 3231815 SDRII
SDRII's picture

Russian capital flight has the faint hint of the 80s cold war


From the Baker Institute


"Russia was clearly hurt by the oil wars waged by Saudi Arabia in the mid 80s"

Reset over

Sun, 02/10/2013 - 21:24 | 3231817 PUD
PUD's picture

That's as daft as every other gold demented nation. All vying to one up the other and come out superior in the end so they can inherit a world of ashes. Stupid fucks all. Besides, when it's 50 below zero outside which will serve you better? Gold or oil? All these articles serve to prove is how stupid human beings are. How greedy, selfish, cruel and ultimately self destructive they are. No one is proposing a new system, co-operation, mutual prosperity...nope, just beggar thy neighbor, prepare thy own bunker and reinforce their delusion that they will somehow come out on top when it all goes to shit. Pure insanity world wide now.

Sun, 02/10/2013 - 23:48 | 3231914 Al Gorerhythm
Al Gorerhythm's picture


You still believe? !!!!!!

You sound like one of those guys who believe government has the right to tax you 100% of your wages and "gift" a portion back to you as a weekly alowance for working the plantation. You would, no dobt, be eternally grateful for their benevolence.


Mon, 02/11/2013 - 09:58 | 3232833 FEDbuster
FEDbuster's picture

As Peter Schiff recently said, "I would rather be a serf, they only had 25% of their labors taken by the lord and king." 

Sun, 02/10/2013 - 22:03 | 3231917 W74
W74's picture

"prepare thy own bunker and reinforce their delusion that they will somehow come out on top when it all goes to shit."

Alright, stand out in the open then. I promise I won't hop out of my bunker to save your screaming ass.

Sun, 02/10/2013 - 22:41 | 3231999 unrulian
unrulian's picture

since our scaley ancestors crawled out of the mud has there ever been a system of co-operation and mutual prosperity that didn't include insanity...ever? i suggest you start digging and get yourself a trusty AR

Sun, 02/10/2013 - 21:25 | 3231818 Orly
Orly's picture

Silly Russians.  We must be ready for the take-down in PMs.

Putin doesn't have to "abscond" with anything. He is by a mile the richest man on the planet.

Sun, 02/10/2013 - 21:34 | 3231845 toys for tits
toys for tits's picture

Plus Putin has a Super Bowl ring.

Sun, 02/10/2013 - 21:42 | 3231866 Orly
Orly's picture

Non sequitur much?

Mon, 02/11/2013 - 03:30 | 3232424 Bay of Pigs
Bay of Pigs's picture

You're still here bashing gold?

BTW, how's that Euro short working out for you?

Mon, 02/11/2013 - 06:05 | 3232485 Orly
Orly's picture

What Eurp short- one from eight months ago?  Do you have any idea how fast things change in 4X?

Get a grip.

I don't need to bash gold.  It's doing a fine enough job on its own.  Speaking of not changing...for what the past two years?  Y'all keep waiting.  I'll be here to ask you what you're waiting for.



Mon, 02/11/2013 - 11:23 | 3233247 mvsjcl
mvsjcl's picture

Richest man on the planet? You know better, Orly. You must be pulling our leg.

Mon, 02/11/2013 - 00:02 | 3232204 Raymond Reason
Raymond Reason's picture

Tsar Nicholas II was the richest man in the world, measured in Gold, until he was executed and his gold transported to those who masterminded and financed it:  The Bank of England and New York Fed.  The Western banks propped up the Soviet Union all the way through the bullshit Cold War, even shipped them food, Bolsheviks were such complete incompetents, until native Russians seized power again.  Russians know their adversaries well, through patience and perseverance will undo them in the near future.  Of course you won't read this version of history in English very often. 

Mon, 02/11/2013 - 00:19 | 3232238 Orly
Orly's picture

It is also certain Putin is the King of all he surveys, over twelve time zones.


Mon, 02/11/2013 - 00:53 | 3232284 cornflakesdisease
cornflakesdisease's picture

Didn't his daddy park the Russian navy in New York & San Fransisco Harbor and tell The Bank of England to but out and let them settle it?

Mon, 02/11/2013 - 00:53 | 3232285 cornflakesdisease
cornflakesdisease's picture

Didn't his daddy park the Russian navy in New York & San Fransisco Harbor and tell The Bank of England to but out and let them settle it?

Mon, 02/11/2013 - 02:55 | 3232398 Raymond Reason
Raymond Reason's picture

That's right, during the Am civil war, but it was also some kind of strategy with what was going on in europe with Poland. After Napoleon, Romanovs became the prime adversaries of Rothchilds, poisoning both Alexander and Nicholas I. 

Mon, 02/11/2013 - 04:33 | 3232454 RafterManFMJ
RafterManFMJ's picture

Which planet? Richer than the reptilian King of planet Nibiru? I somehow doubt it.

Sun, 02/10/2013 - 21:25 | 3231821 gwar5
gwar5's picture

Seems China is still in the official BRIC lead. Wonder if Putin also has more gold secrets in the real currency war.



Sun, 02/10/2013 - 21:25 | 3231822 GOSPLAN HERO
GOSPLAN HERO's picture

No gold at Fort Knox ... just bat shit.

Sun, 02/10/2013 - 21:28 | 3231828 Hulk
Hulk's picture

Damn, what is it with all these sovereigns, hoarding this barbaric relic , which ain't backed by nuthing ???

Mon, 02/11/2013 - 00:49 | 3232276 jeff montanye
jeff montanye's picture

most of the countries in both asia and opec have small percentages of their large foreign reserves in the form of gold.  most of it is said to be held by the u.s. and europe. 

wonder when the truth will out.

Sun, 02/10/2013 - 21:31 | 3231835 espirit
espirit's picture

Putin's ahead of the curve on this one, and the central banksters know it.

The losers are selling.

Sun, 02/10/2013 - 21:32 | 3231840 disabledvet
disabledvet's picture

Still no missile launch. What's the world waiting for? It sure isn't "the death of the dollar."

Sun, 02/10/2013 - 21:36 | 3231848 Whalley World
Whalley World's picture

Regarding China's reserves. they are most certainly different than IMF figures represent

Sun, 02/10/2013 - 21:41 | 3231861 Chupacabra-322
Chupacabra-322's picture

Russia and China are going to cripple the Fascist UNITED STATES without even fireing  a single shot.

B.R.I.C.S. are the next Global reserve currency. 

Sun, 02/10/2013 - 21:44 | 3231871 Orly
Orly's picture

What, no </sarc> tag?

Sun, 02/10/2013 - 22:00 | 3231905 W74
W74's picture

You included South Africa in that?  That's a joke right?

Mon, 02/11/2013 - 05:24 | 3232466 Wile-E-Coyote
Wile-E-Coyote's picture

Couldn't agree more. The USA is in terminal decline, now if anyone fires the first shot it will be the US.

Sun, 02/10/2013 - 21:42 | 3231863 Kastorsky
Kastorsky's picture

Putin is tougher than Chuck Norris


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