"De-Dollarization" Deepens: Russia Buys Most Gold In Six Months, Continues Selling US Treasuries

Tyler Durden's picture

The rumors of Russia selling its gold reserves, it is now clear, were greatly exaggerated as not only did Putin not sell, Russian gold reserves rose by their largest amount in six months in December to just over $46 billion (near the highest since April 2013). It appears all the "Russia is selling" chatter did was lower prices enabling them to gather non-fiat physical assets at a lower cost. On the other hand, there is another trend that continues for the Russians - that of reducing their exposure to US Treasury debt. For the 20th month in a row, Russia's holdings of US Treasury debt fell year-over-year - selling into the strength.  

Buying low...

Russia gold reserves jump the most in six months in December, near the highest since April 2013...


and selling high...

Russian holdings of US Treasuries are now at the 2nd lowest since 2008...


It would appear the greatest rotations that no one is talking about are the fiat to non-fiat and the paper to physical shifts occurring in China and Russia.

Charts: Bloomberg

Some have commented on the "unprecedented" capital flight from Russia, but as Dr. Constantin Gurdgiev explains - Western 'analysts' appear to have forgotten a few things...

Central Bank of Russia released full-year 2014 capital outflows figures, prompting cheerful chatter from the US officials and academics gleefully loading the demise of the Russian economy
The figures are ugly: official net outflows of capital stood at USD151.5 billion - roughly 2.5 times the rate of outflows in 2013 - USD61 billion. Q1 outflows were USD48.2 billion, Q2 outflows declined to USD22.4 billion, Q3 2014 outflows netted USD 7.7 billion and Q4 2014 outflows rose to USD72.9 billion. Thus, Q4 2014 outflows - on the face of it - were larger than full-year 2013 outflows.
There are, however, few caveats to these figures that Western analysts of the Russian economy tend to ignore. These are:
  • USD 19.8 billion of outflows in Q4 2014 were down to new liquidity supply measures by the CB of Russia which extended new currency credit lines to Russian banks. In other words, these are loans. One can assume the banks will default on these, or one can assume that they will repay these loans. In the former case, outflows will not be reversible, in the latter case they will be.
  • In Q1-Q3 2014 net outflows of capital that were accounted for by the banks repayment of foreign funding lines (remember the sanctions on banks came in Q2-Q3 2014) amounted to USD16.1 billion. You can call this outflow of funds or you can call it paying down debt. The former sounds ominous, the latter sounds less so - repaying debts improves balance sheets. But, hey, it would't be so apocalyptic, thus. We do not have aggregated data on this for Q4 2014 yet, but on monthly basis, same outflows for the banking sector amounted to at least USD11.8 billion. So that's USD 27.9 billion in forced banks deleveraging in 2014. Again, may be that is bad, or may be it is good. Or may be it is simply more nuanced than screaming headline numbers suggest.
  • Deleveraging - debt repayments - in non-banking sector was even bigger. In Q4 2014 alone planned debt redemptions amounted to USD 34.8 billion. Beyond that, we have no idea is there were forced (or unplanned) redemptions.
So in Q3-Q4 2014 alone, banks redemptions were scheduled to run at USD45.321 billion and corporate sector redemptions were scheduled at USD72.684 billion. In simple terms, then, USD 118 billion or 78 percent of the catastrophic capital flight out of Russia in 2014 was down to debt redemptions in banking and corporate sectors. Not 'investors fleeing' or depositors 'taking a run', but partially forced debt repayments. 
Let's put this into a slightly different perspective. Whatever your view of the European and US policies during the Global Financial Crisis and the subsequent Great Recession might be, one corner stone of all such policies was banks' deleveraging - aka 'pay down of debt'. Russia did not adopt such a policy on its own, but was forced to do so by the sanctions that shut off Russian banks and companies (including those not directly listed in the sanctions) from the Western credit markets. But if you think the above process is a catastrophe for the Russian economy induced by Kremlin, you really should be asking yourself a question or two about the US and European deleveraging policies at home.
And after you do, give another thought to the remaining USD 33 billion of outflows. These include dollarisation of Russian households' accounts (conversion of rubles into dollars and other currencies), the forex effects of holding currencies other than US dollars, the valuations changes on gold reserves etc.
As some might say, look at Greece… Yes, things are ugly in Russia. Yes, deleveraging is forced, and painful. Yes, capital outflows are massive. But, a bit of silver lining there: most of the capital flight that Western analysts decry goes to improve Russian balance-sheets and reduce Russian external debt. That can't be too bad, right? Because if it was so bad, then... Greece, Cyprus, Spain, Italy, Ireland, Portugal, France, and so on... spring to mind with their 'deleveraging' drives...
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SilverDoctors's picture

Its not just Russia! (or China, India, etc). 

Now its the SWISS!  The Swiss de-pegging from the Euro was really a short the Euro, go LOOONG GOLD play. 

In his latest interview, Jim Willie is predicting that the Swiss have just unleashed an EPIC derivatives contagion that will TAKE DOWN THE EURO AND THE DOLLAR in 2015, and see gold double after a global revaluation!

Buckle up boyz and girls!! 

Bloppy's picture

How about silver? How long does that remain at $17 before taking off like gold?


Hawaiian congresswoman slams Obama over mishandling of Islamic extremism:


Tao 4 the Show's picture

The chart someone posted a couple of days ago noted that the Swiss pegged to the Euro precisely at the top of the last run up in gold (all time high). Does the de-peg mean that the downdraft is over? Good ole' Marty Armstrong says no, or he sort of says no, because he says it won't go up unless there is a monthly close above 1350. But how can there not be a monthly close above 1350 if a run up starts in earnest?

Ah the life of an analyst and their ways with words.

Jim Willie is fun to listen to, but not sure about the idea of the Swiss shorting the Euro. Swiss who? The SNB? The Swiss industry? Does not make much sense, but I will give it a listen in any case.

aPlayer's picture

Why are they selling their treasuries so slowly?

Looney's picture

Speaking of de-dollarization...

Putin has replaced the CB’s Monetary Policy Chief, Ksenia Udayeva (PhD from MIT), with a new dude.

It looks like he is getting rid of the IMF/Goldman people replacing them with the BRICS people.

Make what you want of this ;-)


Tao 4 the Show's picture

Very interesting - thanks.

Someone posted this link recenty:


Really worth a listen to get the picture you are describing.

Looney's picture

Any personnel changes of such a caliber used to require a nod from the IMF.

Now, they don't ;-)


Tao 4 the Show's picture

I think now they result in swearing by the IMF.

Here is the transcript of that video:

It is now clear to everyone, even for intellectually exceptional as British Prime Minister Cameron, the global crisis is growing. He said the next big crisis was before us. We note a growing hysteria among various Western leaders.

When, immediately after the G20 summit in Brisbane, Frau Merkel began promoting the free trade area between the EU and the United States, that would result in the de-industrialization of Western Europe similar to what was done in Bulgaria and the Baltic States, it became clear that only large-scale events could push these countries to engage in such dangerous ways, ways that they would not otherwise dare to follow. It is too powerful a blow against their status and position. In other words, they do not anticipate the long-term consequences, because certain future events will contradict them.

What are these events? We need to understand current events from an economic perspective, whose current model is the financial and economic system created at Bretton Woods. Many people mistakenly think that this system died on 15 August 1971, when the United States declared their second debt default in the 20th century by refusing the conversion of dollars into gold. But this is not quite true.

The Bretton Woods system is a mechanism that has been set up to extend the size of the dollar zone by creating its own institutions, the International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT), now known as the World Trade Organization (WTO). All these institutions are still there. They define the Bretton Woods system in which all assets are denominated in dollars.

The global economic model works as follows: it is a mechanism for the redistribution of wealth, which is manifested when the US Federal Reserve prints dollars to acquire new assets which then become part of the dollar system. Originally, it was the countries of Western Europe, and Japan, Taiwan, Korea, China, and later the countries of the socialist community. Today this model has reached its natural limits.

All global assets, including Russian oil is denominated in dollars. That is to say, they are part of the capitalization in dollars held by companies owning oil fields. The world has more new realizable assets in dollars, everything is already converted. This means that it is impossible to continue printing dollars - there are no more assets made ??payable in US dollars. An attempt was made ??by creating fictitious assets, the so-called derivatives . However, it turned out that this could not work because there are too many of them. There is no more profits to extract from the global economy.

Some participants in this process, including Russia and China, saying: "Hey guys, where's our share? We had not agreed to this result  . " In fact, in the past, the benefit of these operations was shared by all. Obviously the United States of America had the largest share, but the others also had part of the cake. In particular, Russia had its share due to high energy prices.

Then national elites could decide whether to steal it entirely, as is happening in Nigeria, or to share with their people. The situation in which the participants no longer receive anything does not suit anyone.

Moreover, in order to protect their economy, the United States began using the Bretton Woods institutions, mainly the financial system, not to give but to take. One of the meanings of the election results in the United States was the choice between the two concepts. The first was to save the global financial system at the expense of US resources, in other words, everyone gets something; the second was to save the US economy at the expense of all others. In other words, rob everyone for the benefit of the United States. The second concept, that American voters associate with the Republican Party, won.

Now we have a world in which Third World countries are no longer entitled to investments in dollars, but in contrast see their money flow back to the United States of America. In this situation that satisfies no one, it is impossible to hope for stability. More likely, everyone will try to rock the boat, and the United States attempt only token responses. Obama, as we know, was in favor of the alternative approach. He thought it was better to save the whole world rather than the United States of America only, but he lost.

Therefore, I am inclined to think that an explosion that will tear apart the remains of Bretton Woods is going to happen very soon, possibly in the next twelve to eighteen months. The internal conflict in Russia today is likely to manifest itself in the President's speech.

There are persistent rumors of an ongoing battle between the two forces and both versions on the economic part of the message are being developed.

The situation is as follows. There is a liberal group that supports the model of Bretton Woods, the IMF. They works exclusively with scenarios dictated by the IMF. Therefore, one should not expect from people like Nabiullina, Oulyoukaev, Shuvalov, Dvorkovich some revelations in favor of support for the Russian economy. They receive instructions that they implement strictly and faithfully. The logic behind their behavior is very simple. They say, "  We have our cake, why should we destroy this model?  ". They can not admit that they do not receive their share of the cake because it no longer exists. They can not agree with that. Their only advantage over others is that they have the opportunity to negotiate with the IMF.

So if the IMF as part of the Bretton Woods system has nothing more to give them, then no one has any need for these people. For this reason, they are trying to save the remnants of this system at any price. I do not know if they understand it or not, but the result is the alienation of our capital and this is detrimental to our condition. Perhaps they understand, but can not accept it, because then they have to flee, together with their capital.

But what awaits them in the Land of the Free , lousy professorships in hick American universities? That hurts. In Russia, the most powerful are deputy ministers, central bank governors and so on. But over there? To actually live on earned income? Imagine a thoroughly modern Russian minister having to live on a salary and pay taxes! From their point of view is simply outrageously cynical.

Another concept, however, said that we should build our own regional financial system. If we do not have access to an investment system linked to the dollar then we have to build our own regional management centers and a mechanism for investments.

I've talked about this before yesterday in Astana in a major conference on the subject of the early second five-year plan of industrialization.

Kazakhstan, unlike Russia, worked for five years on import substitution. Although initially the conditions in Kazakhstan are worse than in Russia, because it is a smaller economy, growth is 4% to 5% while ours has plunged in the last two years. This is the consequence of industrialization.

We discussed this issue with President of Kazakhstan at the round table, scheduled to last 30-40 minutes, which lasted for two hours. It was a real discussion, because Nazarbayev asked about what could be done realistically. I said that we needed to have our own means of investment, because we no longer have it under the Bretton Woods system (IMF, etc.). The confrontation that followed mainly concerned the strategy, and there can not be any compromise.

Hence the rumors that the presidential speech was only prepared by the administration and the government was not involved. The government, together with its School of Economics, wrote their own liberal views in the knowledge that God does not exist outside of the IMF and the prophets, Lagarde and Janet Yellen.

I do not know how this will end, but it is absolutely clear to me that the sudden departure of Putin from Brisbane was not caused by the feeling of being offended. Forgive me, but someone who was educated as an agent of the intelligence services, was trained from childhood, does not to react to such things. He left, not because he was offended, but because he realized that it was pointless to talk to people like them. They do not and cannot discuss critical issues, as they are just part of the show. If they act like puppets, we need to address those who pull their strings; if they do not understand, it is another matter. I tend to believe that they are puppets, but not within the puppeteers, but rather within the framework of certain rules of the game, of such a liberal correctness that is so entrenched in their consciousness that they can no longer escape it. They keep on running in a hamster wheel going nowhere. Talking with them is pointless, so we need to create our alternative models.

In general, we have to forget the European Union and the United States of America for a while. The European Union is not a viable entity. How they will sink is another question. They may try to save it by creating a two-tier body. Part of the old countries of Western Europe will become a first-class European Union and Eastern Europe will be second class. Overall I think that the topic can be closed. Saying he must force the free trade area with the United States, Frau Merkel really put an end to the European Union. You can forget it from now on.

The sharp conflict between the pro-Western forces and Eurasian forces, which began in Russia in the early 90s, has now reached a level when the anti-IMF forces, if not finally caught up with Liberals, have at least heard their voices. We'll see if the liberal forces are able to present, at least, some arguments to the society. So far all their arguments were from a position of power. They've been saying, "Chaps, we schmooze with the IMF, so you need us." Today, it is clear that the IMF will not give us anything. Then they need to choose a different approach. But what do they offer? Destroy education, medicine, the pension system? The banking system? In reality, the liberal system turns to dust everything it touches.

If the President of the Russian Federation chooses the liberal option in his speech, I fear his power becomes dust.

SoberOne's picture

Cliff's  notes: Gold, bitchez.

Tao 4 the Show's picture

Looney said it above: There is an internal war in Russia between the IMF aligned bankers and those allied with Russia/Putin. Putin is gradually moving the IMF guys out.

BlindMonkey's picture

...which may be greatly accelerated by their relative uppityness.

Urban Redneck's picture

Those aren't reserves, they're manufacuring inventory. Switzerland refines 3/4 of the worlds gold (if you want or need to build stock- it helps to control the flow).  The gold (raw material) has been predominately coming from London and flowing East all year (they only started the monthly breakdown by country at the beginning of 2014).


Manthong's picture

Russia will be just fine as long as they store their gold in London..

in unallocated accounts..

like Mexico does.

Muh Raf's picture

Very important point manthong (Keiser just covered this, see around 13:30 onwards where he interviews Mexican bullion analyst: https://www.youtube.com/watch?feature=player_embedded&v=p0W7T1PZWJ4 ) since hardly anyone is actually getting delivery of the purchases. Can't help but think that both Russia and China are the proud owners of receipts for shelves that may or may not be stocked, which means that their respective reserves declarations are dodgy optimisms at best.  

Four chan's picture

all of this would be unnessasary if we were still on the founding fathers gold silver standard.

disabledvet's picture

Orb just signed a billion dollar deal to buy Russian RD-181 rocket engines and does plan on launching resupply this year.  Stock was up big on the news.


That one engine has equal the power to Elon's Merlin 1D.  Absolutely top of the line.  "You ain't selling that in rubles" let alone reindeer skins.



The amount of stuff being launched into outer space this year is downright dangerous actually...and we will have a problem of "space garbage" going forward believe it or not.


That is VERY valuable garbage however.  Use the space station to start collecting that stuff...melt it down, make yourself a space ship from what already is just floating around out there.

Latina Lover's picture

Yo, Disabled Vet, where can I buy what you are smoking, bro?

Idaho potato head's picture

Courtesy of the VA, drugs r us...

Atomizer's picture

He thinks he's buying refitted rolls royce engines. Good luck with that. 


Anusocracy's picture

I hope someone decides to move the ISS out of Earth orbit and put it in orbit around Mars. Maybe park it on one of the moons.

It's too valuable to let burn up.

FrankieGoesToHollywood's picture

What is the value of the ISS?  Money already spent doesnt count.  Im asking, in terms of forward earnings, is the ISS worth?  Im not sure what ground breaking gerbal experiments they are doing up there but Im not convinced it is a money maker.

Tall Tom's picture

...in terms of forward earnings...


And that, right there, is the problem with Business and Science. Science explores for the sake of exploration and concerns itself not with profits.


Business will be happy to apply what Scientists learn for "forward earnings". But much about what Scientists learndo not equate with "forward earnings".


But on those occasional happenstances when Scientists do discover something which absolutely revolutionizes our quality of life, and, which provides for entire new industry, the "forward earnings" vastly outweigh all of the investment into the "non profitable" science.


Tis unfortunate that the businessman is so myopic and only is able to understand that which directly produces profits in the short term without realizing that the foundation upon which he stands, the current quality of life which he currently enjoys, is directly due to the science of 160 years ago....especially Maxwell's Electrodynamics investigations which without, you'd not be able to express your myopia upon these Internet pages.


(Of course Maxwellian Electrodynamics did not afford the people in his age, his peers, the luxuries we now enjoy and take for granted.)


Yeah. You may not enjoy the "forward earnings" of what today's scientists may learn. But your distant progeny, those whom are not even born, will.


Now I know that I will never travel through Intersteallar Space, much less make to Low Earth Orbit.


But NASA Scientists, TODAY, are seeking to use the Angular Momentum of the Galaxy itself, to transport an Intersteallar Spacecraft to an Earth Like Planet in a Star System in the Constellation of Cygnus if they shoud happen to find a suitable target.


Maybe in 300 years Earthlings, maybe not even from the United States, will board a Spacecraft, seeking a new home at a Planet orbiting a distant star which we NASA just may discover in the very near future....USING NASA data as the guide.


But it is all about you and your short sightedness, right?

Latina Lover's picture

Good post. Worth reading twice. Interesting, isn't it, how the Mainstream Liar Media rolls out shills to keep telling us that the Russians are selling their gold.  Now that they are proven wrong, will the liars at SocGen retract (mockingly LOL)?

Ghordius's picture

Tao 4 the show, very interesting, and yet I detect a "fervent wish", there. i.e. in having either a Washington dictated narrative or a Moscow dictated narrative

hence your dismissal of the European Union as something that has to "go away". at the end, because you prefer one of the two "main" narratives to win

as a reminder, when it comes to the IMF it's the US Congress that wants to keep everything "just as it it", and the rest of the world wanting reform

GCT's picture

Speaking of reform Ghordius, Putin did indeed replace his head goldman sachs/ IMF banker with another not associated with any western ties.  Some of Tao's narrative is  wishful thinnking I believe. 

HowdyDoody's picture

"It is now clear to everyone, even for intellectually exceptional as British Prime Minister Cameron"

Touche! Cameron really is intellectually exceptional as are the rest of the Oxford Bullingdon Boyz.

agent default's picture

Because China has vast reserves of USD denominated assets including treasuries.  He doesn't want to impair China since they are probably following the same path. 

walktheline's picture

I think this got lost in translation: what I think was meant was that Cameron is intellectually challenged, which at the end of the day is about as objec tive as it gets without resorting to hyperbole or personal abuse.

Bingo Hammer's picture

So that they don't get blamed for taking down the "system" by the rest of the world...this way its more like "death by a thousand cuts"

BooMushroom's picture

You've seen those nanex charts where a big player sells their whole wad at once ... CRASH! Better to dribble them out slowly and steadily to get a better return. Especially if your aim is to get value for them rather than just fuck with the system.

e-recep's picture

Don't listen to any analyst who uses the word "if".

joego1's picture

The congress woman has the guts to say what needs to be said. Obama does not. This is not about Islamophobia or hate. It is about clearly identifying and understanding the enemy and until we do we are losing the war.




BorisTheBlade's picture

I think gold will do more than just double.

mt paul's picture

one ounce of gold

will always be one ounce of gold


perspective, value of the fiat currency 

is what changes..

MarketAnarchist's picture


That is what people fail to understand mt paul.  You cannot make money off of gold or silver.  Gold and silver ARE money.  The amount of currency units an ounce of gold will buy you is all that changes.

disabledvet's picture





If however...the Government backed its money with gold...

TheHound73's picture

Because 1 oz is 1 oz humans must forever be chained to the same quantity of oil/chickens/whatever exchanged for said 1 oz?  That's pants-on-head talk right there.

MarketAnarchist's picture

No completely wrong.  If you have 10 chickens or 10 barrels of oil and 10 oz of gold, they cost 1 oz.  If you become more productive and now there are 100 chickens or a hundred barrels of oil, now they cost 1/10 of an oz.   In NO WAY does the quantity of gold restrain production of other assets, its just defines their prices.

winchester's picture

gold is not money, gold is and remain gold. it is the VALUE depending currencies used to exchange for IT that fluctuate, gold never was money. this is what nobody understand.


gold is just like a brick, when you need to build you look for bricks to build then bricks become rare so price rocket sky, when nobody need housing and every one got home, no more need for bricks, then price go down...

but a brick remain a brick, just like gold remain gold, it is not money. money is the system all around.


Peter Pan's picture

This is true in the long run however there are periods in the short run where gold well out performs other asset classes. In other words, there are periods where the buying capacity of gold against a basket of goods rises substantially.

Squid-puppets a-go-go's picture

indeed. while i beleive that Au + Ag are the premier form of money, they are still subject to perception of value. This is a factor you couldnt take away even in the absence of money - in a barter economy the # of fish needed to buy a length of timber is not set in stone (or gold)

seek's picture

No kidding. Double from Friday's close is $2,558. We were at $1800 three years ago and we've been sitting on a solid decade plus of price suppression.

I'm by no means a gold-to-the-moon type, but when the USD and the gold manipulation scam finally breaks, doubling of prices is laughably conservative. When after the dollar was un-pegged in the 70s, it instanteously doubled, and less than a decade later it comfortably traded at 2.5 times the price a year before for more than a year during economic troubles -- which was about 14 times what it was when it got unpegged (arguably a good model for what happens when suppression disappears).

Fast forward to 2015, something close to $3,200 seems reasonable within a year of the bad news finally arriving, and 5-20K ten years later isn't crazy.

We talk about the "japanification" of the US or Europe, take a look at the historical gold price charts in yen. 3X move in 10 years with gold price suppression.

Nearly any way you look at the numbers, gold will be well into in the mid-single-digit thousands in the next few years with just "normal" behavior, and possibly much higher, by 10X or more, if the manipulation ends..

CHX's picture

No kidding, with an market cap of over 600B, apple alone is worth about ~5.4 years of global mine supply of gold at current levels and prices. There is so much fiat out there, only a tiny amount goes into PMs and there will be a shock as the pricing mechanism fails and paper gold burns in hell.

Squid-puppets a-go-go's picture

yer but what he's saying is an official doubling of gold price (say, those wankers who set the london gold fix) overnight. From there its implied it will continue to be organically bid higher

which isnt implausible, and i dont see china or russia declaring a currency fix to gold - not until it has risen as high as possible to compensate them for all the purchases america will never pay them back - which i beleive is likely somewhere between $10 000 / $15 000 ounce

your timeline of around 10 years is agreed

kchrisc's picture

Some are saying, myself included, that the Zionists are pushing up the dollar as an exit strategy from the dollar.

The central bank's central bank, the BIS, is in Switzerland.

The banksters need to repay us.

quasimodo's picture

Repay us for what exactly? Drilling us all in the rear for over a century?

If anything it's time for us to repay them with a boatload of interest, and the only interest I refer to involves some actual justice be served, whatever form that happens to be,