Not content with its Central Bank being this year’s world’s largest gold purchaser, Russia looks like it might be moving into second place in the world gold mine production table, overtaking Australia. Last year Russia mined just under 8 million ounces of gold – around 248.5 tonnes – as opposed to Australia’s 265.3 tonnes, but Russian gold output is reported as rising 26.6% in the first half of the year and if this level of increase continues in H2 Russian full year output could total 314.6 tonnes, although with normally far higher output in the second half of the year this kind of annual percentage increase may not be achievable. Thus industry sources in Russia estimate full year production at a rather more conservative 275 tonnes – a rise of only just over 10% but one suspects they may be erring on the side of caution, particularly as previous 2014 Russian production estimates had suggested mined gold output could fall back 5% this year.
Even should Russia see a 20% plus expansion in its gold output this year it will still have a long way to go to challenge China’s lead. But it is perhaps significant that the two nations which are likely to top the gold production table this year are also believed to be the two gest hoarders of new gold into their official reserves. Russia is presumed to be more transparent in this in reporting its gold reserve figures to the IMF while China’s official reserve figure has remained at 1054 tonnes for over 5 years now, but it is widely believed to be considerably higher than this – perhaps two to three times the official figure – maybe more. China is expected to announce a major gold reserve increase at a time it feels is politically expedient to do so. Some Western observers feel it is holding back in doing this to not create waves in the gold price. This would enable it to buy more at today’s lower prices rather than see the price shoot up, which it likely would should it make any really substantial gold reserve increase announcement. Both nations are believed to be buying in gold, whether openly or surreptitiously, in order to reduce their dependence on U.S. dollars and the two nations together, which are already making bilateral agreements to trade in their own currencies and by pass the dollar, are the most likely to challenge dollar hegemony in world trade.