Russia Holds More Gold Than Dollars
For the first time in history, Russia holds more gold in its reserves than United States dollars, reported Bloomberg on January 12. This is a milestone for Russia and a warning to the U.S. Russia is willing to risk moving away from the dollar. The question is, will others follow? Over the course of many years, Russia has been decreasing its holding of dollars. To replace them, it has amassed gold and non-American currencies. The Russian Central Bank reports that only 22 percent of its international reserves are in U.S. dollars; gold accounts for 23 percent.
Russia holds $583 billion in international reserves. These are funds that can be exchanged between central banks of different countries. Therefore, they must be stable and internationally recognized currencies. Since the end of World War ii, the dollar has been the primary reserve currency.
Russia’s largest reserve currency holding is the euro, accounting for a third of all reserves. Gold is the second largest. Chinese Yuan comprises about 12 percent. Bloomberg wrote, “The shift is part of a broader strategy outlined by [Russian] President Vladimir Putin to ‘de-dollarize’ the Russian economy and lower its vulnerability to U.S. sanctions amid deteriorating relations with Washington.”
When a nation’s central bank buys gold, its government expects the future to be unpredictable. It can also be a precursor to armed conflict. While this does not mean war is imminent, it does mean Russia is well-prepared.