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The World’s Gold-Reserve Race to End the US Dollar’s Dominance

Apr 24, 2018 | Peter Christensen |

The World’s Gold-Reserve Race to End the US Dollar’s Dominance

The US has long been dominant in terms of gold reserves, but China and Russia have been ramping up their reserves are could soon overtake the position of the US.

Most recently, Russia seems to be the strongest contender. In February, the Central Bank of Russia (CBR) increased its gold holdings by 20 metric tons to a total of 1,857 tons. In fact, the CBR has increased its holdings every month for the past three years, putting Russia among the top holders of gold and surpassing China (1,843 tons).

The top holders of gold

In an attempt to become less dependent on the US dollar, China and Russia have accumulated gold reserves over the past 15 years. We are also seeing how both Russia and China publicly promote their accumulating of gold and their view of gold as a monetary asset, while the US is downplaying gold’s role.

The US claims to hold 8,134 tons of gold, but it’s impossible to verify that claim because there has never been a fully independent audit of the gold reserves, and no one is allowed to enter the vault to view and count the gold.

In second place, we find Germany with 3,374 tons. Over 50% of its reserves are stored in Frankfurt, while the rest is stored in London and New York. The International Monetary Fund comes in third with 2,814 tons.

Russia is stepping up its game

President Vladimir Putin has stated that he wants Russia to become less vulnerable to geopolitical risks. As a result, the CBR has more than doubled the pace of its gold purchases, and their gold reserves have increased by a stunning 500% since 2000.

Purchasing gold is one thing. Producing it is another. Russia is the third-largest producer of gold in the world, and two-thirds of gold produced in Russia has been purchased by the CBR as a safe haven against geopolitical tensions, including the US sanctions against Russia. Another reason Russia is increasing its gold reserves is diversification.

What will this mean for the US dollar and for the price of gold? Take a look at our article “Will the US$ crash?” for our detailed discussions of the ramifications of the weakening of the US dollar.