Russia has overtaken China and is now the fifth-biggest sovereign holder of gold in the world, Bloomberg reports.
In January, the country’s central bank increased its stockpile by almost 20 metric tons to 1,857 tons, topping the People’s Bank of China’s reported 1,843 tons. While Russia has increased its holdings every month since March 2015, China last reported buying gold in October 2016.
The development allows Russia to diversify its foreign currency holdings amid a deepening rift with the U.S. and the threat of more serious sanctions looms over Moscow.
Only three countries in the top 10 have increased their gold reserves materially in recent years, with Turkey being the third. The U.S. is still the largest owner of gold, with 8,134 tons, much of it stored in Fort Knox. Germany is the second-largest, with 3,374 tons, and the International Monetary Fund owns 2,814 tons.
Gold offers Russia independence from the dollar amid financial sanctions from the U.S. and its allies. The measures were imposed in 2014 as punishment for Russia’s involvement in Ukraine and could be tightened in future. Much of the country’s gold purchases come from local production — Russia is the world’s third-largest miner of the metal, according to research firm Metals Focus.
Earlier this month it was reported that the Russian government has purchased two-thirds of all the gold mined in country, buying it from local banks to add to reserves as the Kremlin sees the precious metal as a “safe haven at a time of geopolitical turbulence”.
“For banks, this is good business. They credit mining companies, which return the loan with the gold they extracted. Then banks sell it to the Central Bank,” according to the Russian Finance Ministry, quoted by Prime news agency.