Russia, other central banks increase gold holdings in January: IMF

Soon after the World Gold Council (WGC) issued a report finding central banks are purchasing high levels of gold bullion, the International Monetary Fund (IMF) revealed that Russia and Kazakhstan expanded their respective gold reserves for a fourth straight month in January. The nation of Azerbaijan purchased gold for the first time in more than three years.

This move shows that central banks are continuing to diversify their assets by acquiring bullion. Russia’s gold holdings rose 12.2 metric tons to 970 tons. Kazakhstan holdings increased 1.5 tons to 116.8 tons, while Azerbaijan’s reserves jumped one ton, the first gain since May 2009 when it held only 64 ounces.

Central banks are expected to be making vast purchases of gold and silver bullion this year. Last year, gold purchases made by central banks increased 17 percent, compared to the year prior, according to the WGC, the most since 1964.

Data from the IMF illustrated that other central banks around the world have purchased gold, even if was quite minimal: Turkey (10.3 tons), Belarus (0.5 ton), Tajikistan (0.1 ton), Serbia (0.3 ton) and Venezuela (1.9 tons).

Only three nations have shown declines in their gold reserves: Mexico shed 0.11 ton, France dropped 1,000 ounces and Iraq cut its gold holdings by one quarter.

For central banks, the practice of holding gold is a way to alleviate the risk of owning too much of a particular currency, such as the United States dollar. During the 1980s, gold accounted for about 60 percent of central bank reserves, but during the 2000s that figure dramatically dropped all the way to 15 percent.

Gold dipped below $1,600 last week to $1,586. At the time of this writing, it’s up $13.50 during the morning trading session.

With the pullback of gold, it was reported that money managers and hedge fund investors decreased their holdings of gold futures and options by 40 percent last week, which is recorded as the biggest reduction since July 2007. Traders also became quite bearish on other commodities, such as coffee and sugar.

The reason why there is a movement to short gold and other commodities is because there are concerns that the Federal Reserve will slow U.S. stimulus programs, but as Economic Collapse News reported, that will most likely not happen.