 (1)_LBMA.jpg)
.jpg)
Your shopping cart
No products in the shopping cart
801 501 521
- Author of the entry: Mennica Skarbowa
- Date of entry:
In response to US economic sanctions, Russia is abandoning US Treasury bonds in favor of gold. Will China follow suit? Such a move would really hurt America.
Although a large proportion of investors currently consider US debt to be a safe haven, in April Russia reduced its holdings of US bonds by almost half. Analysts at Danske Bank note that, as geopolitical tensions deepen, Russia has found an alternative and is turning to gold.
"Some people are asking whether the Russian central bank sold US bonds to support the ruble, but in reality it is a matter of reallocation, as reserves continue to grow," said Vladimir Miklashevsky, an expert at Danske Bank in Helsinki.
In April, Russia sold US Treasury bonds worth $47.4 billion. Meanwhile, as announced yesterday by the Central Bank of Russia, last month the country's gold reserves increased by 1% and now amount to 62 million ounces, valued today at approximately $80.5 billion.
Shortly after inaugurating his fourth term as Russian president, Vladimir Putin announced that Russia wanted to "break away from the dollar" and diversify its reserves in order to "strengthen its sovereignty." Although the dollar currently accounts for as much as 46% of the value of Russian reserves, the signal has been sent, and the accumulated gold is intended to protect the Russian economy from the effects of further sanctions.
However, it would be most interesting if China followed Russia's lead, as its plans regarding the dollar may be similar. At the end of April, China held US bonds worth nearly $1.2 trillion. It is not difficult to imagine how disposing of even half of that amount could affect global markets.
Although a large proportion of investors currently consider US debt to be a safe haven, in April Russia reduced its holdings of US bonds by almost half. Analysts at Danske Bank note that, as geopolitical tensions deepen, Russia has found an alternative and is turning to gold.
"Some people are asking whether the Russian central bank sold US bonds to support the ruble, but in reality it is a matter of reallocation, as reserves continue to grow," said Vladimir Miklashevsky, an expert at Danske Bank in Helsinki.
In April, Russia sold US Treasury bonds worth $47.4 billion. Meanwhile, as announced yesterday by the Central Bank of Russia, last month the country's gold reserves increased by 1% and now amount to 62 million ounces, valued today at approximately $80.5 billion.
Shortly after inaugurating his fourth term as Russian president, Vladimir Putin announced that Russia wanted to "break away from the dollar" and diversify its reserves in order to "strengthen its sovereignty." Although the dollar currently accounts for as much as 46% of the value of Russian reserves, the signal has been sent, and the accumulated gold is intended to protect the Russian economy from the effects of further sanctions.
However, it would be most interesting if China followed Russia's lead, as its plans regarding the dollar may be similar. At the end of April, China held US bonds worth nearly $1.2 trillion. It is not difficult to imagine how disposing of even half of that amount could affect global markets.
