Russia Plans to add More Gold, Eventually Yuan, to Reserves

As further evidence that central bank interest in gold accumulation continues unabated, Russia’s indicated that it’s going to continue increasing the proportion of gold holdings in its already third largest in the world foreign exchange reserves. The statement is consistent with the plan Russia has had in place since at least June of last year, when president Medvedev announced Russia would reduce its use of the US dollar, despite its position as the world’s reserve currency.

According to Bloomberg:

“‘We’ve increased our investment in gold during the last several years and we will continue to move in the same direction in the future, ‘ he [First Deputy Central Bank Chairman Alexei Ulyukayev] said in an interview in London. ‘Gold is a natural part of reserves.’

“Russia, which aims to diversify its reserves, started adding the Canadian dollar and plans to invest in the Australian dollar. The central bank has almost doubled the share of gold in the past three or four years, according to Ulyukayev. The stockpile comprises 47 percent U.S. dollars, 41 percent euros, 9 percent British pounds, 2 percent Japanese yen and 1 percent Canadian dollars, according to the central bank.

“The bank won’t begin to add the Australian dollar until the middle of the year, Ulyukayev said on Dec. 1. Policy makers may also add new currencies to the reserves, with the Chinese yuan a potential target once it becomes fully convertible.”

Foreign central banks are wising up enough to slowly back away from paper currencies and especially the dollar, which for so long has been the majority holding of most nations. The tide of central banks turning away from the dollar is liable to continue throughout 2011. You can read more details in Bloomberg’s coverage of Russia raising the share of gold in its reserves.

Best,

Rocky Vega,
The Daily Reckoning