Russia’s stash of gold recently became the world’s largest, beating out previous front-runner China. The gold rush is a hedge against uncertainty in the world’s reserve currencies, the dollar and the euro. “The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” said Evgeny Fedorov, a member of Russia’s parliament, to financial publication Bloomberg.
Russia has increased the country’s gold holdings by 570 metric tons over the past decade. That’s a quantity that weighs three times as much as the Statue of Liberty. Gold prices reached an all-time high in 2011, which it reached $1900 an ounce. The current $1658 an ounce, while lower, is still far above rates just a decade ago.
Why is Russia buying so near the metal’s high? The possible reasons are two-fold. While gold prices in cash are high, their exchange rate in other minerals is far lower. Russia is the world’s largest oil producer. And, while it took 28 barrels of oil to buy an ounce of gold in 1998, now, it takes just 4. Gold prices are also expected to reach $1800 again by the end of the year.
Gold has figured prominently in Russia’s monetary policy at many points in history. In 1897, Tsar Nicholas returned the country to the gold standard in an attempt to stabilize the country’s history.
In Lenin’s communist Russia, the leader said that gold was to be reserved for a far different reason; he believed that gold, in a Communist utopia, gold would become valueless. In his eyes, the lust for gold was the cause of great inequality and millions of deaths. He said that, instead of keeping all that gold as a reserve currency, he had a more novel idea: one day, all of the public toilets in Russia’s cities would be plated with gold.