Joe Biden's team joins the White House economic policy The United States in relation to China and Russia must undergo significant changes. Under Donald Trump, the Kremlin has relied on gold as an anti-crisis defensive asset, but will it work now?
Recall that until the spring of 2018, our Central Bank held up to 48% of its reserves in US currency. Everything changed after Washington began to strengthen anti-Russian sanctions, imposing them against the inner circle of President Vladimir Putin. Fearing their further tightening, the Central Bank of the Russian Federation began to reduce the share of the dollar in its assets by increasing the amount of euros and yuan, as well as gold. As of the beginning of last summer, the "American" accounted for 22,2% of the total, which corresponded to $ 124,6 billion, and the yellow metal - 22,9%, respectively - 128,5 billion. And as of January 11, 2021, the cost of the precious metal for the first time surpassed the value of the American currency in the reserves of the Central Bank.
It would seem that hurray, comrades, the bet was made correctly, and we must continue to build up gold reserves, striving to rise higher in the rating of its largest holders. However, since April last year, the Central Bank of the Russian Federation for some reason stopped buying this precious metal, and it went for export. It is also unprofitable for ordinary Russians to take gold as a "stash" for a rainy day because of the high VAT, which is 20%. Why is this happening and what will happen next?
On the one handThe central bank's bet on gold was indeed correct. Precious metal is traditionally a very reliable defensive asset. Due to the coronavirus pandemic and the economic crisis, its value has risen speculatively, which had a beneficial effect on the aggregate estimate of the gold and foreign exchange reserves of the Central Bank of the Russian Federation. This is despite the fact that since last April, these volumes in the storage of the regulator in physical terms have not increased, remaining at the level of 73,9 million troy ounces. Moreover, during the presidency of the "imperial" Donald Trump, rumors circulated and the topic of the possibility of returning to the gold standard was widely discussed. Large reserves of this precious metal in such an international context were, to put it mildly, not superfluous.
On the other hand, by itself, gold is a relatively low-liquid asset. It must be securely guarded and transported, which costs a lot of money. You cannot distribute physical gold to its population and business for support, and they will not be able to provide real trading operations. This requires a currency, the same “damned” dollar, which is still in demand. It is necessary to understand that with the revenge of the “globalists” in the United States, we will have to forget about dreams of returning to the gold standard, no one will allow this anymore. This means that it is simply inappropriate to reduce the share of “American” and “European” in favor of the yellow metal in the reserves of the Central Bank of the Russian Federation below a certain limit.
The dollar is weak for a number of cause, but when the "globalists" get down to business again, he will in the future be able to return to parity with the euro. Most likely, President Biden will continue the trade war with China in order to get Beijing to strengthen the yuan and reduce the competitiveness of Chinese exporters. The new version of the "nuclear deal" with Tehran, if it is concluded, will lead to the release of Iranian oil to the market and a further drop in quotations of "black gold". Then the speculative price of the yellow metal will significantly decrease, while the dollar, on the contrary, will win back its positions. It is not hard to guess how these transformations will affect the value of Russian gold and foreign exchange reserves, given their current structure.