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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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From: loantech	11/16/2005 9:01:31 AM
	of 78419

Russian Central Bank May Double Proportion of Gold Reserves By Tim Wood 15 Nov 2005 at 08:43 AM EST JOHANNESBURG (ResourceInvestor.com) -- Addressing delegates to the LBMA Precious Metals Conference on its last day, Russia's Head of External Reserves Management, Maria Guegina, said gold reserves as a proportion of all reserves may be doubled. Noting that Russia presently has 5% of its national reserve portfolio invested in gold, Guegina said, “10% of gold in reserves would be appropriate”. She gave no time frame for the change. Guegina said the change was part of an ongoing effort to optimize the composition of assets and reserves managed by the bank. The bank is also encouraging the development of the Russian domestic gold market to be a fully functioning financial market akin to bonds and currencies. Russia presently has 500 tonnes (17.64moz) of gold in reserves which it segregates as monetary gold, allocated gold and term deposits. The envisaged doubling of Russia’s gold reserves as a proportion of all reserves at present values would consume all the country’s annual gold output for around three years. Russia produced nearly 182 tonnes of gold in 2004 and is expected to mine and sell 183 tonnes this year. The actual tonnage to be added continues to grow as Russia aggressively builds its overall reserves thanks to a windfall profits from oil and gas, a good deal of which is now flowing directly to the state. At recent oil prices Russia was raking in $500 million a day from its oil exports. Guegina’s indication of Russian gold buying chimes with comments yesterday by Professor Kenneth Rogoff. He told delegates that he expects gold sales to be reversed in the medium term as central banks seek to offset rising risks and because of the need for diversification away from the American dollar. Buying gold could also stem the threat of domestic inflation by keeping rubles out of the economy. At the start of November Russia's gold and foreign currency reserves grossed a record $164.97 billion, up one-third from the first of January figure of $124.54 billion. By year-end the reserves are forecast to rise to around $180 billion. Were the Russian Central Bank to move immediately to the 10% gold allocation, it would need to buy an additional 21.1 million ounces, or 646 tonnes. That is equivalent to over two years of South Africa’s total annual gold output. resourceinvestor.com

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